Non-performing bank loans could hit 10% on COVID - association director

According to the CEIC global economic data service, the country's non-performing loans ratio stood at 4.3 % last month.
According to the CEIC global economic data service, the country's non-performing loans ratio stood at 4.3 % last month.
Image: 123RF/ tashatuvango

Non-performing loans could hit 10% this year, thanks to COVID-19 related economic troubles, the banking association's managing director Bongiwe Kunene said on a conference call on Thursday.

She added that this may deplete banks' capital buffers. She did not give an equivalent figure for bad loans for last year, but according to the CEIC global economic data service, South Africa's non-performing loans ratio stood at 4.3 % last month.

The country was already in recession before the COVID-19 pandemic struck, and the fallout of mainstays like mining and tourism have ravaged an already fragile economy. The central bank expects the economy to shrink 7% this year.

"So far, we are working with the numbers of 10% NPLs (non-performing loans) which may deplete the capital buffers," Kunene said.

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