Key trends and factors shaping Corporate and Institutional Banking

Corporate and Institutional Banking (CIB) is the backbone supporting economic activity in South Africa as it provides essential capital markets services, structured trade finance solutions, transactional banking, and advisory services to corporates, small- to medium-sized enterprises (SMEs), government entities, and institutional clients.

With the South African Reserve Bank (SARB) raising its 2025 economic growth forecast to 1.2% from 0.9%, and 1.3% for 2026, local CIB providers will look to build on the momentum gained from gradual economic reform, moderated inflation, and continued relief for households and corporates as interest rates decline, which should drive domestic consumption.

“The national infrastructure development agenda is progressing, albeit slowly. Investment opportunities in this area have surged, driven by reforms that facilitate greater private sector participation. Reforms are gaining traction beyond renewable energy investments to encompass transmission, freight logistics, port infrastructure, and water,” affirms Lourens van Rensburg, Head of Investec Corporate and Institutional Banking (CIB).

“At a macro level, opportunities to grow lending books will present themselves as the South African economy is entering a mild cyclical upturn.”

With a revised 3% inflation anchor announced by the SARB at its July 2025 Monetary Policy Committee (MPC) meeting, Van Rensburg expects that interest rates will remain contained into 2027, supported by external drivers such as a weaker US dollar and low oil prices.

However, Van Rensburg highlights various external challenges emerging in the dynamic global landscape that will create challenges and opportunities for South African businesses. 

“There are significant changes in the global political landscape, with trade fragmentation and the emergence of new trading blocs likely to impact supply chains. The imposition of US tariffs on South Africa necessitates that we compete with other nations to secure new markets.” In an environment characterised by tariff uncertainty, volatility and a rapidly evolving world order, corporate and investment banks need to balance risk appetite with growth.

“President Trump’s tariff strategy in his second term, combined with a rapidly evolving geopolitical landscape, has generated significant uncertainty and volatility across global economies,” affirms Van Rensburg.

“This has compounded existing macroeconomic pressures and led to slower growth in many countries, creating an exceptionally challenging environment for the risk management community. Many risk functions within financial institutions are likely to find it increasingly difficult to predict potential market and credit risk scenarios in both domestic and international markets.” 

Van Rensburg explains that tariffs may disrupt established supply chains, resulting in increased costs and cash flow pressures for clients' businesses, which could lead to a rise in loan defaults.

“Consequently, additional risk mitigants, such as enhanced financial analysis and increased monitoring, may be implemented to provide early warning signals for potential financial distress. Moreover, scenario analysis and stress testing are vital tools for understanding the various potential outcomes and their impact on transactions or our asset portfolios.”

From a microeconomic perspective, focused investments by businesses can enhance operational efficiencies to unlock opportunities that can exploit the positive economic developments.

For example, the integration of Artificial Intelligence (AI) in the workplace is another positive development poised to transform the business landscape, asserts Van Rensburg.

“AI will evolve cost structures and subsequent short- and long-term financing needs of corporates. Overall, the landscape is becoming increasingly favourable, with more opportunities emerging for business.”

Meeting evolving regulatory compliance requirements around Basel IV and sustainability mandates will also require funding from banks as businesses respond to Environmental, Social, and Governance (ESG) requirements.

“Basel IV and sustainability mandates aren’t just regulatory checkboxes; they’re pushing us to think smarter and act more strategically in how we do business,” explains Van Rensburg. Van Rensburg explains that Basel IV is making banks more intentional about where capital goes, encouraging a shift toward backing high-quality, high-impact transactions that align with a deeper understanding of client needs and long-term value.

“At the same time, new sustainability rules are shifting how we look at risk, and what gets funded. This is speeding up the focus on sustainable and transition finance, areas where banks can add real value by supporting clients through their decarbonisation journeys, funding resilient infrastructure, and unlocking innovation in green technologies. These changes are reshaping balance sheets and deal pipelines by putting more emphasis on capital efficiency, risk-adjusted returns, and long-term impact.”

By balancing traditional banking strengths with innovative approaches, the local CIB providers will remain a key facilitator of South Africa’s economic transformation and help businesses navigate the dynamic global and domestic economic and geopolitical landscape.