| Standard Bank has provided a glimpse of what investors can expect from SA banks this year as the recession deepens and interest rates are slashed to help cushion struggling consumers and businesses. In a first-quarter performance update for the benefit of Chinese shareholder ICBC, the bank said earnings were down and credit impairments were significantly higher than a year ago. On the one hand, lower interest rates are starting to affect its interest income. And with South Africans staying indoors, the fee income it gets from visits to its branches and ATMs will also come under pressure during the lockdown. Ingham Analytics say the SA Reserve Bank has brought in Covid-19 induced measures. But without the lockdown they say there would have been a little cause for rate cuts and other interventions. They also point to qualifications that the Governor has made, which they hope government finally listens to. The macro backdrop was negative for banks in any event prior to Covid-19 and sharply lower interest rates will have what they refer to as a "A negative endowment" effect. Their repeated warnings of not being invested in banking stocks is reflected in the dramatic fall in banks' share prices. Do you buy now or stay clear? You can find out here. While the Reserve Bank's Prudential Authority has already guided banks to hold back on dividends this year due to the impact Covid-19 is likely to have on the financial system, many other companies have also decided to preserve cash. The latest are property groups Octodec Investments and Redefine Properties, while KAP Industrial says its board is also unlikely to recommend a dividend for the year to end-June. More on those stories to follow, along with results from consumer electronics and appliances group Nu-World and quarterly sales growth numbers from Cashbuild. Meanwhile, Gemfields has beefed up security at its Montepuez Ruby Mine in Mozambique after the government released prisoners to reduce overcrowding at its prisons due to Covid-19 - including around 150 illegal miners. Whose telling fibs? Read the latest note by Andrew Kinsey of Ingham Analytics to find out. This unpacks the links between the equity and credit markets. "Whose telling fibs, equity or credit?" addresses the arcane arts of Credit Default Swaps and Expected Default Frequency models. Whose on the chopping block for default? Access the report here. I hope you have a good day and stay safe. Stephen Gunnion Managing Editor, InceConnect
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