Clarity on bank share value

Strict regulation and high service fees guarantee good returns for investors.

- Adriaan Kruger

Banks and financial services are some of the most popular shares among companies exposed to South Africa. Strict regulation by competent authorities ensures solvency and high service fees guarantee good returns for investors. The dip in share prices before last year's elections provided a good entry point.

Bank shares have increased sharply since then. See the table below. Capitec increased by 56% from below R2 010 per share to R3 137. Absa increased by nearly 42%. The increases in the share prices of Nedbank, Standard Bank and FirstRand were more "muted", with gains of around 30%. That the price of Investec increased by only 8% needs to be put into perspective. It had a run up to above R142 after the elections to post a gain of nearly 24%, but has since seen a decline.