Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of
The Outlooks are Stable. A full list of rating actions is below.
Key Rating Drivers
The Long-Term IDRs of SBG and SBSA are driven by their standalone creditworthiness, as expressed by their 'bb-' Viability Ratings (VRs). The VRs are one notch below the implied VRs of 'bb' due to operating environment and sovereign rating constraints. This underlines the concentration of activities in
The VRs reflect SBG's leading domestic and regional franchise, strong profitability, and comfortable capital buffers and liquidity. The National Ratings reflect the entities' creditworthiness in local currency relative to that of other South African issuers.
VRs Equalised with Group: The VR of SBG, a non-operating bank holding company (BHC), is equalised with the group VR due to the absence of double leverage (end-2024: 98%), and high fungibility of capital and liquidity within the group. SBSA's VR is also aligned with the group VR as it is the main operating entity (64% of SBG's end-2024 consolidated assets).
Slow Economic Growth: Fitch forecasts real GDP growth to reach 1.6% in 2025 and 1.1% in 2026, slightly above our estimate for the country's medium-term real GDP growth potential of 1%. This steady but modest economic expansion reflects the impact of US tariffs on South African exports, combined with structural bottlenecks, although this forecast may be revised in light of the latest tariff announcements.
Growth is underpinned by a recovery in household consumption and rising investments alongside improved electricity supplies and easing price pressures. This will support banks' ability to generate reasonable business volumes and perform profitably given still high interest rates and decreasing impairment charges.
Leading Domestic Franchise: SBG has a leading domestic franchise through SBSA, which accounted for 24% of South African banking system assets at end-1M25. SBG also has a leading sub-Saharan Africa (SSA) franchise, with operations spanning 19 other SSA countries (19% of consolidated assets at end-2024). Revenue diversification is strong by income stream and geography. SSA operations (excluding
Significant Household Lending: Retail lending made up 44% of gross loans at end-2024. It is concentrated within
Moderating Impaired Loans: SBG's Fitch-adjusted impaired loans (Stage 3 loans under IFRS 9) ratio decreased to 6.7% at end-2024 after peaking at 7.1% at end-1H24 due to improving economic conditions. Fitch expects the Stage 3 loans ratio to further improve in 2025.
Strong Profitability: Wide net interest margins, high non-interest income and moderate loan impairment charges (LICs) support profitability. We expect the Fitch-adjusted operating profit/risk-weighted assets ratio (2024: 3.8%) to decrease slightly in 2025 as interest rates decline.
Good Loss Absorption Buffers: We expect SBG to retain its common equity Tier 1 (CET1) ratio (end-2024: 12.6%, excluding unappropriated profits) comfortably above the regulatory minimum. Fitch-adjusted pre-impairment operating profit (2024: 5.6% of average gross loans) gives a large buffer to absorb potential credit losses.
Strong Funding Franchise: Fitch-adjusted customer deposits are the main source of funding (75% at end-2024). Depositor concentration is fairly high, but behavioural stability benefits from a leading domestic franchise. We consider liquidity coverage healthy.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
SBG and SBSA's Long-Term IDRs and VRs are constrained by
A downgrade of the Long-Term IDRs and VRs could also result from a material weakening in capitalisation, as indicated by a decline in SBG's CET1 ratio to below 10%, which could stem from greater-than-expected asset-quality deterioration or more aggressive shareholder distributions.
SBG's VR could be notched off the group VR if the BHC's double leverage increases above 120% for a sustained period without clear prospects for moderation.
SBG and SBSA's National Ratings are sensitive to weakening creditworthiness relative to other South African issuers.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of the VRs and Long-Term IDRs would require a sovereign upgrade, while maintaining healthy financial metrics.
SBG and SBSA's National Ratings are sensitive to strengthening creditworthiness relative to other South African issuers.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
As a BHC, SBG's senior unsecured debt is rated one notch below its Long-Term IDR for loss severity, reflecting below-average recovery prospects in case of a default due to a thin qualifying junior debt buffer at group level.
SBSA's senior unsecured debt is rated in line with its IDRs as a default on these obligations would be considered a default of the bank according to Fitch's rating definition.
SBG and SBSA's Government Support Ratings (GSRs) of 'no support' reflect Fitch's view that following the implementation of a resolution regime in
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
SBG and SBSA's senior unsecured debt ratings are sensitive to a change in their IDRs.
An upgrade of the GSRs would be contingent on a positive change in the sovereign's propensity to support the bank or its BHC. While not impossible, this is highly unlikely, given existing resolution legislation and the presence of foreign/wholesale funding, in particular on the BHC's balance sheet, which could be politically acceptable to bail in.
VR ADJUSTMENTS
The business profile score of 'bb+' has been assigned below the 'bbb' category implied score due to the following adjustment reason: business model (negative).
The asset quality score of 'bb-' has been assigned above the 'b or below' category implied score due to the following adjustment reason: underwriting standards and growth (positive).
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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