Today’s post by Ayrton Griffin-Ellis shows that higher policy rates tend to be associated with higher net interest income as banks reprice interest earning assets more quickly and completely than their deposits. As a result, banks tend to experience rising profitability during hiking cycles, as long as the economy does not deteriorate and credit losses rise. As we showed in earlier posts (here and here). South Africa’s largest banks have very high sensitivity of bank interest income and expenses to changes in interest rates by global standards. Note that SARB income statement data for the remainder of 2025 is not yet available.
