00:00Let's just start with some of the performance of your Southern African business.
00:05What should investors be reading into the performance, especially considering at least here in South Africa, we've been seeing green shoots.
00:12What does this mean for the current stability that we're seeing in South Africa and potentially the performance of the bank moving forward?
00:22Thanks very much. Morning, Jennifer.
00:24I think just looking at our South African business, one is to see it in the context of the H1 of the prior year.
00:32In the prior year, our earnings were also buoyed by an increase in investment income, largely off a listed equity stock we held within our group investment portfolio in SA.
00:44So that aside, if we look at the underlying earnings drivers for the bank in South Africa across lending activity, deposit raising activity,
00:53funds under management in our wealth business, all of those are actually up year on year.
01:00In taking into account actual activity levels, we're comfortable that we're seeing good activity levels.
01:06We have also over the period seen a slight uptick in costs.
01:10Some of this relates to investment in some of the growth strategy we've spoken to the market about,
01:15including the corporate mid-market offering that we're taking two clients in a segment of between 30 million to one and a half billion rand of turnover.
01:22So a segment that we already have some footprint in that we intend accelerating our growth footprint over the next five years, both in South Africa and in the U.K.
01:35Kamesh, let's just stay in South Africa because there has been a bit of at least green shoots optimism for the direction of the economy.
01:43Do you do you sense that this is actually a meaningful turning point or what are you assessing at this point?
01:52Jennifer, I think if we look at the SA macros at the moment, we've actually shifted from I think 2024 was a year of positive sentiment.
02:012025, I think it can be more summed up about delivery and execution.
02:06And when I refer to that comment, what I'm really referring to is the fact that you can see tangibly an improvement in core economic fundamentals.
02:18The fact that we're entering a more benign inflation rate environment, that the monetary policy sort of medicine that the Reserve Bank has been administering has really taken effect in a positive way.
02:32Right. Inflation is under control. Yesterday, the MPC met and we obviously saw the first interest rate cut.
02:38And I think ultimately, over time, the consumer will benefit from lower lending rates, lower interest rates, as well as a lower inflation environment.
02:46So I think that's a core fundamental shift.
02:48The second has been the fact that we have come off the FATF grade list.
02:52The third would be that we've also got the positive rating from Standard & Poor's, that we've had ratings upgrade.
03:01And those are all showing the trajectory of some of the significant work that's been undertaken through the Presidential Structural Reform Programme under Operation Rulandlela.
03:10So I think there's been a key shift. The only thing I would add is that we really need to continue moving with speed in terms of some of these public-private partnerships
03:18to unlock the rail and port corridors to become really globally market competitive.
03:24Commissioner, let's just talk also about the G20. We've been reporting on sort of the public spat between the U.S. and South Africa.
03:32What's your concern here for how this could potentially derail any sort of consensus at the end of the summit?
03:40I think it is obviously significant. You've got one of the world's superpowers not attending.
03:46But with that said, Jennifer, I think the fact that I've attended a number of aligned events with the B20 aligned to the G20.
03:55And what's been clear to me has been a high level of engagement across a number of other countries, both Europe, UK, other countries in the East, China, India, et cetera,
04:07all of that highly engaged sets of debates, business-to-business engagement.
04:11And the idea that people are really talking and understanding that the concept of multilateralism as we currently know it is shifting,
04:24and the shift is to more bilateral relationships. That's unfortunate in many ways.
04:29But what you can see is governments adapting to the new normal.
04:34And I'd say looking through the noise, looking through the headlines,
04:37what we've certainly seen has been really good engagement, good traction with global counterparties on trade,
04:43on relationships, on international support.
04:46And one would hope that in time there would be some engagement with the U.S.
04:50to close out what's really been an unfortunate set of events.
04:55What would you say is perhaps the most important recommendation that should be carried forward with the U.S. taking over the G20?
05:03There have been some proposals for an overhaul of Basel III.
05:08Is that something that you as the CEO of a bank are looking closely at?
05:12I think it's really key that banks work off the same playing field internationally.
05:19And I think we're currently sitting in a situation where the U.S.'s approach to Basel III is different to Europe and UK in some respects.
05:27And if we could get a consensus view for global financial markets, for stability, for international trade and for competitiveness,
05:35it would be very, very helpful to have a level of consensus and also a level of capital requirement that allows particularly developing markets
05:45an easier access into the international trade flow.
05:50My concern would be that we sit in a situation where potentially emerging market financial institutions carry a heavier capital burden
06:00than some of their developed market counterparts.
06:03And that would be restrictive to trade, development and economic growth.
06:08And I think we're really does not require the case.
Be the first to comment