The South African Reserve Bank published the first edition 2025 Financial Stability Review, assessing developments from December 2024 to May 2025 and the outlook to June 2026. It judges that the South African financial system remained resilient and is expected to stay resilient over the forecast period, but with higher residual vulnerability than in the November 2024 review to increased geopolitical tension and policy uncertainty, rapid capital outflows, and critical domestic infrastructure failure. By contrast, vulnerability to remaining on the Financial Action Task Force greylist over the medium term fell significantly. The review links the more challenging backdrop to heightened global trade and policy uncertainty, including the United States’ 2 April 2025 tariff announcements and associated market volatility, and notes sizeable non-resident equity sales of R111 billion in the first five months of 2025. Domestically, the financial stability heatmap points to imbalances building in banks’ sovereign exposure, public debt and debt-service metrics, non-resident portfolio flows and household financial strain, while regulated institutions’ capital and liquidity buffers remain above minimum requirements; the Financial Conditions Index indicates relatively tight conditions. The report also highlights a negative credit-to-gross domestic product gap since the fourth quarter of 2020, and updates on key policy and resilience initiatives including the countercyclical capital buffer increase from 0% to 1% effective 1 January 2025 (with banks required to implement by 31 December 2025), crisis simulation exercises for resolution and market closure and reopening procedures, and a sector cyber-range exercise in March 2025. It additionally summarises the first Climate Risk Stress Test of the six systemically important banks, including banks’ classification of 32% of total credit exposure as climate sensitive and findings that data and modelling gaps remain. On greylisting, the review cites the FATF’s 13 June 2025 statement that South Africa had addressed or largely addressed all 22 action items under its action plan, triggering an on-site assessment before the October 2025 FATF Plenary, with delisting expected if the visit confirms reforms are implemented and sustained.
South African Reserve Bank 2025-06-19
South African Reserve Bank Financial Stability Review flags higher geopolitical and capital outflow risks and reduced FATF greylist vulnerability
The South African Reserve Bank's 2025 Financial Stability Review shows the financial system's resilience despite vulnerabilities from geopolitical tensions, policy uncertainty, and rapid capital outflows. It highlights non-resident equity sales, banks' sovereign exposure imbalances, and household financial strain, noting capital and liquidity buffers remain above minimum requirements. It also reports on the first Climate Risk Stress Test and updates on key policy initiatives, including a countercyclical capital buffer increase and crisis simulation exercises.