Is the banking party over?

Good Morning Voornaam,

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A new week means a new episode of the Ghost Wrap podcast, brought to you by Mazars. Designed by a busy ghost for busy investors, this covers eight companies every week in approximately as many minutes. This week, I looked at industrial players Bell Equipment, Invicta and Sasol. Tharisa b>was there from the mining sector, with Bytes Technology and Absa adding more sectors to the mix. Finally, there were property updates from Accelerate Property Fund and RMB Holdings. Get everything you need to know in this podcast>>>

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Is the banking party over?

Higher (and the "er" is important here) interest rates and demand for credit creates a lovely environment for banks. They can lend more and charge more for the privilege, with expanding net interest margin and positive JAWS (income growing faster than expenses).

But at some point, the ghost of impairments arrives. Not all ghosts are friendly. Or purple, for that matter.

This ghost is burning bright red at the moment, with credit loss ratios increasi ng sharply. This ruins the party for banks, as it means that earnings growth is nowhere near as exciting as it used to be. Are we now in a space of high interest rates, not just higher interest rates?

To get this information from Absa and to learn more about Ninety One and Rebosis while you're at it, read this morning's edition of Ghost Bites here>>>

The dollar had a bad week

Last week was all about dollar weakness. The dollar index reached its lowest level since early 2022, with the rand strengthening by over R1.00 against the dollar in the space of just a few days. Despite news that all five heads of state will attend the BRICS conference in South Africa in August, the rand's behaviour hasn't changed.

TreasuryONE notes that in the week ahead, we can expect US Retail Sales to cause more uncertainty for the dollar if it disappoints. Eurozone and UK inflation numbers are likely to impact major currencies as well. For the rand, geopolitics and load shedding could impact the story.

With that, I wish you a productive week ahead!

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