The average income of First National Bank (FNB) customers plummeted by about 20% during the nation’s lockdown as people took pay cuts or had less work.

FirstRand’s retail banking unit also experienced a “major drop-off” in transactional activity and credit-card spending as businesses closed and people stayed at home, FNB’s retail banking head Raj Makanjee said on a call with reporters on Tuesday.

Credit growth suffered as South Africans opted to save, he said. The slump in business is in line with guidance from other SA lenders that earnings for the first half of the year will probably decline by at least 20% as measures to curb the pandemic take their toll on customers’ finances.

Unlike its main competitors, FirstRand reports annual results through June. Banks have all extended relief to clients to help shore up their cash flows, including payment holidays and emergency loans. SA moved to alert level 3 from June 1 after being at level 4 for a month.

That was preceded by five weeks of a strict level 5 lockdown that shuttered almost all activity except essential services. The central bank sees the economy contracting by 7% in 2020.

FNB has also adjusted its eBucks rewards programme to offer Netflix and Spotify discounts as clients spend more time indoors, Makanjee said.

Pressure to outshine peers persists for SA’s biggest banks, which have seen several new players enter the market in recent years, while intensified competition in the industry has also seen incumbents snatching some clients, Makanjee said. “When the economy goes through this level of challenge, we do expect a level of consolidation.

“It’s going to be very difficult for all competitors to stand and cope with the magnitude of the impact,” he said. “Certainly, we want some of these new competitors to be strong, but we think it’s going to be tougher.”

Bloomberg