Banking index: Rate jitters weigh on shares June 11, 2008
South African banking shares dropped for the third day on the JSE on concerns the Reserve Bank will increase borrowing costs tomorrow.
Standard Bank shares fell 2.6 percent to R79.25 late in the afternoon, the lowest since November 2006, before climbing back to close at R80.55. Absa fell 4.24 percent to R83.60, while FirstRand dropped 1.83 percent to R13.92. Nedbank retreated 3.74 percent to R91.74.
Higher borrowing costs may hurt banks' earnings by weakening demand for loans and increasing the number of people and companies that cannot afford to repay existing debt.
"Banks face huge headwinds," said Razia Khan, the Africa economist at Standard Chartered. The banking sector fell 1.85 percent. - Bloomberg
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