Since the previous survey, the following developments most likely contributed to reduced financial sector confidence:
- The prime overdraft rate was increased for an eighth time in December 2007. Retail banks now face a further rise in nonperforming
- The implosion of the sub-prime mortgage market in the USA led to stress in financial markets, which in turn led to a major
world wide. These developments affected South African financial institutions adversely in several ways:
- Investment banking activity plummeted3.
- Investment managers saw a big drop in net inflows, probably as investors switched from equity investments to safer
havens, such as bank deposits and contractual investments4.
- Falling net inflows and fluctuations in the value of funds under management dampened income growth of investment
managers. This development hurt small managers disproportionately more than large managers.
- Life insurers experienced a big fall in investment income growth.
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