How much you would have if you invested R10,000 in Absa, Capitec, Nedbank, and Investec in 2015

South Africa’s six biggest banks have seen mixed performances over the last decade, with share price growth ranging from roughly 5% to 600%.

South Africa’s banks have proved remarkably resilient over the last decade despite a series of extreme challenges.

This includes low economic growth in South Africa, the COVID-19 pandemic, and heightened geopolitical uncertainty.

Another recent challenge for banks has been the heightened interest rate environment, with the repo rate hitting a 15-year high of 8.25% in 2024.

This comes after elevated inflation levels started hitting South Africa following the COVID-19 pandemic and Russia’s invasion of Ukraine.

This forced the South African Reserve Bank (SARB) to increase interest rates dramatically in a bid to reduce inflation. For banks, this move has ups and downs.

The banks could benefit from heightened interest rate income. However, heightened cost pressures could see credit impairments rise as customers struggle to pay off their loans.

Despite the challenges facing banks across the globe, banks in South Africa continue to show resilience, with high profits and returns to shareholders.

Nevertheless, the performance of the biggest banks remains incredibly varied, with some seeing their share price jump remarkably while others have stagnated.

Capitec

Capitec has comfortably been the best-performing banking stock in South Africa over the last decade, seeing its share price increase by a whopping 594% over the last decade.

This means that R10,000 invested in Capitec in early March 2015 would now be worth just under R70,000 today.

From its start in the micro-lending industry, Capitec has undergone a massive transformation and is now a financial services powerhouse.

On top of its retail banking products, Capitec now also offers business banking, following its purchase of Mercantile Bank in 2019, and its own underwritten life insurance service.

With a focus on simple products, Capitec now has over 23 million customers in South Africa and has successfully acquired the customers that the “Big Four” banks often neglected.

Despite its remarkable share price growth, Capitec is still seen as a challenger bank, with investors believing that there is still upside potential for the stock.

Investec

While Capitec focuses on the retail mass market, Investec focuses exclusively on the high-earning South Africans and Brits.

The bank has seen its share price grow strongly by 85.25% in the last decade, meaning that R10,000 invested in 2015 would now be worth R18,525.

Despite the challenging economic environment, Investec declared a record dividend for its 2023/24 financial year.

The group’s revenue benefitted from balance sheet growth and the elevated interest rate environment in the UK and South Africa.

Although revenue momentum is expected to be underpinned by average book growth, the group said that this is expected to be partly offset by the effects of reducing global interest rates.

In South Africa, the Reserve Bank has cut interest rates in the last three Monetary Policy Committee meetings, and more is expected in 2025.

Standard Bank

South Africa’s largest bank by assets under management, Standard Bank, is the third-best performing stock.

Standard Bank saw its share price increase by 40.87% over the period, meaning that R10,000 in 2015 would now be worth R14,087.

In its latest trading statement for the first 10 months of 2024, the group said that credit impairments were also lower period on period due to a slowdown in early arrears.

It added that lower inflows into non-performing loans in Personal and Private banking also contributed to lower credit impairments.

However, the group’s credit loss ratio for the first 10 months of 2024 also remained in the top half of the group’s through-the-cycle range of 70 to 100 basis points.

FirstRand

FirstRand, the owner of FNB, RMB and Wesbank, is in fourth place, with R10,000 in 2015 now worth R13,540.

FirstRand saw its headline earnings grow by 4% to 679 cents per share in the year ending 30 June 2024.

The group, however, warned that the worse-than-expected interest rate cycle meant that FNB’s retail segment is trending above its Through-The-Cycle range when it comes to credit losses.

The group’s interim results for the second half of 2024 on March 6, 2025, with further price movements possibly around the corner.

Nedbank

Nedbank is in fifth place, seeing its share price only increase by 12.67% over the last decade. This means that R10,000 invested in the “Big Four” banks in 2015 will now only be worth just over R11,000.

In its latest financial results for 2024, the group’s headline earnings increased by 10% to R3.6 billion over the period.

The bank also announced a major restructuring, which will see the group split its Retail and Business Banking (RBB) and Nedbank Wealth clusters into new segments, such as:

• Personal and Private Banking (PPB)
• Business and Commercial Banking (BCB)
• Corporate Investment Banking

Absa

In last place is Absa, which has only seen its share price grow by 4.57% over the last decade, returning investors less than R500 in share price growth over the last decade.

Absa’s most recent results have been dissapointing, with group headline earnings per share dropping by 5% in the first half of 2024.

This saw CEO Arrie Rautenbach enter early retirement, with Charles Russon becoming Interim CEO, joining a long list of recent CEOs.

Although CEO changes at the big banks are common, with Jason Quinn and Mary Vilikazi taking over as CEOs of Nedbank and FirstRand, respectively, in 2024, Absa has seen a revolving door.

Following Maria Ramos’s tenure as CEO from 2009 to 2019, Absa has seen six CEO in as many years on permanent and interim bases. The bank is currently on the search for a permanent replacement for Rautenbach.