South African banks are on the cusp of a lending cycle that could be the strongest in seven years.
A new report by S&P Global is projecting as much as 9% growth implying R500bn-plus of fresh credit as a surge in corporate borrowing for renewables and infrastructure meets a softer interest rate backdrop.
That pace, as outlined in S&P Global’s 2026 “South Africa Banking Outlook Report”, will turbocharge project finance in an economy that has hardly grown over the past decade and a half.
It also coincides with a favourable political moment for President Cyril Rampahosa, who is basking in a glow of national goodwill, thanks to improving fiscal metrics, the removal from the Financial Action Task Force greylist, a rare double sovereign credit upgrade from S&P Global and a strong showing in financial markets.
Analysts at S&P Global forecast that lending will increase 8%-9% in 2026. At the top end, that implies R529bn of fresh loans flowing into the economy — a windfall for renewables, logistics and infrastructure projects.
S&P Global’s projection is anchored on two converging forces. First, corporate credit has already been accelerating, rising 7.6% year on year to the end of September driven by a pipeline of private energy projects and government-led structural reforms. Second, the monetary backdrop is easing with the Reserve Bank starting to cut rates in late 2024, and cumulative easing has reduced borrowing costs, making large projects, finance and working capital loans more attractive.
Power projects
S&P Global notes that banks are preparing to finance a surge in energy and infrastructure projects, pointing to a 22,500MW private sector pipeline to the value of almost R400bn. The agency adds that lenders “intend to finance projects intended for the government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) as well as private power projects,” with reforms in rail, ports and water expected to unlock further demand.
For banks, the revenue maths means high loan volumes, fees from project finance and a still healthy share of non-interest income should keep return on equity above long-run averages.
“Despite a slightly tighter net interest margin due to rate cuts, we expect South African banks will maintain strong profitability, with return on equity averaging 15%-16%,” S&P Global says in the document.
South African banks are sitting on a treasure trove of cash, their balance sheets fortified, and their common equity tier ratios comfortably above the regulatory minimums.
The shift is visible in the real economy data. Planned capital investment jumped 16.4% last year to R705bn, according to Nedbank’s annual Capital Expenditure Project Listing, powered by a more than three-fold surge in private sector commitments to R382bn.
Energy continues to anchor South Africa’s investment plans, with electricity, gas and water projects totalling R415.6bn, or nearly 60% of all announced investment.
“The rise in private-sector project announcements is reflective of a better cyclical environment,” Nedbank said.
Telecoms, logistics and data infrastructure
The private pipeline is broadening beyond energy. Vodacom’s R85.2bn Vision 2030 programme, MTN’s R45bn network upgrade and proposed R50bn inland port in Gauteng headline a wave of telecoms, logistics and data infrastructure projects.
Mining and quarrying projects also tripled year on year, while transport and communications spending was bolstered by new subsea cable and data-centre investments. Public sector announcements fell back after a heavy 2024 pipeline, but Nedbank said this reflects slow execution rather than withdrawal, with many state projects still in early implementation.
Public corporations dominated by Eskom still account for 45% of the total value of planned projects, largely due to the utility’s R320bn five-year infrastructure overhaul.
Gross fixed capital formation is expected to recover gradually, with Nedbank forecasting growth of 2% in 2026 after a contraction of 2.3% in 2025 and a sub-par average of 1.9% over the next three years.
The 1.6% rise in the third quarter of 2025 ended a three-quarter decline, but gross fixed capital formation (GFCF) remains stuck at about 14% of GDP, well below the 20% threshold widely seen by economists as necessary for sustained 3% growth.
East Asian economies that successfully transitioned to high-income status — South Korea and Singapore — sustained investment rates of 30%-40% of GDP during their industrialisation phases.
S&P Global also noted household borrowing will remain subdued, reflecting a high household debt-to-income ratio, which stands at above 60%.
“Since lower interest rates take time to translate into increased household borrowing, the rise in household credit remained subdued at an estimated 2%-3% in 2025 and was largely supported by mortgage lending,” the rating agency said.
