The four major banks in South Africa - Absa, FirstRand, Nedbank, and Standard Bank - have paid the South African Revenue Service (Sars) around R37.7 billion in direct taxes to government in 2023.
This was revealed by the audit firm PricewaterhouseCoopers (PwC), who released its latest report on South Africa’s four major banks in March.
The report looked at the period ending December 2023 as all of the SA’s largest banks have reported their financial results by the end of March.
The report showed:
– Standard Bank paid R12.72 billion in direct taxes
– FirstRand paid R12.59 billion in direct taxes
– Absa paid R7.98 billion in direct taxes
– Nedbank paid R4.43 billion in direct taxes
“The formation of these results, which are enviable by global measures coupled with solid growth momentum continues to demonstrate the underlying franchise strength of South Africa’s major banks,“ Rivaan Roopnarain, PwC South Africa Banking and Capital Markets Partner said.
He also said that these results illustrated that these banks had a diverse mix of businesses, Roopnarain said.
Headline hearings
The report also said that the four banks combined headline earnings reached a new record annual level of R113.2 billion.
In 2022, the combined earnings was R99.5 billion and therefore the growth illustrated a 13.8% rise in earnings.
SA economy and bank contributions
South Africa’s economy grew by a marginal 0.1% in the fourth quarter of 2023, taking the annual growth rate for 2024 to 0.6%, according to StatsSA.
“Earnings from South African major banks operations reflect various symmetries to the low-growth South African GDP environment, which dampened overall earnings growth rates on a combined basis,” PwC said.
The research said that despite slow growth conditions in SA, and the challenging macroeconomic environment throughout 2023, SA’s major banks’ results exhibited their solid operating foundations.
“Aided by the positive endowment effect of the higher interest rate environment, the major banks continued the performance trajectory observed in the first half of the year, albeit under more difficult trading conditions than may have been anticipated at the start of the year and with the effect of interest rates on impairment charges more visible,” the Pwc said.
A good year for Sars
In Early April, Sars said that as of the end of March 2024, the institution has collected a record gross amount of R2.1 trillion, year-on-year 4.2% against the nominal GDP of 4,9%.
The figures illustrate that the tax man has collected a net amount to R1.7 trillion which is almost R10 billion higher than the revised estimate and R54 billion more than last year’s R 1.6 trillion.
Sars noted that in terms of just Valued Added Tax (VAT) refunds, the organisation drew in R343 billion and this represented a growth of 7.5% over last year.
The institution said that total refunds this year, represented around 6% of GDP.
R21 trillion in collections
Sars has collected around R21.6 trillion in net tax revenues since its inception.
“The R21.6 trillion tax collections represents a compound growth of 9.9% per year since the inception of Sars in 1997. This has funded the South African democracy and touched the lives of millions who would be destitute without government support and services,” Sars Commissioner Edward Kieswetter said.
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