2025 Financial Stability Review

Executive summary: In the November 2024 Financial Stability Review (FSR), the South African Reserve Bank (SARB) noted the resilience of the South African financial system despite various global and domestic shocks. The SARB also judged that the financial stability outlook had improved over the course of 2024. The assessment was supported by factors such as reduced electricity shortages, evidence of fiscal consolidation and an improved sovereign credit rating outlook, all of which bolstered sentiment. The orderly national elections and the subsequent formation of a Government of National Unity (GNU) further supported the improved financial stability outlook. 

Conditions in 2025 have been more challenging. Globally, systemic risk increased during the period under review, mainly due to a surge in policy uncertainty in response to international trade conflicts. Other factors such as fears over a United States (US) recession, downward revisions to global growth projections, and new and ongoing military conflicts have added to the sense of a global poly-crisis. In turn, this has contributed to extreme market volatility globally and significant losses in some asset classes. 

These global uncertainties and the implications for domestic financial stability are the focus of this edition of the FSR. The key risks to financial stability discussed in this edition are as follows: 

i. increased geopolitical tension and policy uncertainty; 

ii. rapid capital outflows amid heightened market uncertainty; 

iii. critical domestic infrastructure failure;

iv. remaining on the Financial Action Task Force (FATF) greylist over the medium term; 

v. deteriorating public sector debt ratios; and 

vi. increased financial distress in households and small- and medium-sized enterprises (SMEs). 

Despite falling outside of the six-month review period to the end of May 2025, a noteworthy development was the statement released by the FATF on 13 June 2025. The statement confirmed that South Africa had addressed or largely addressed all 22 action items agreed to as per the Action Plan following South Africa’s greylisting in February 2023. The risk of South Africa remaining on the FATF greylist over the medium term has therefore reduced significantly. The South African financial system continued to function without interruption and despite heightened market volatility. Prudentially regulated domestic financial institutions remained resilient, partly owing to their ability to maintain adequate capital buffers to absorb the impact of shocks. However, downwards revisions to the domestic economic growth forecast will likely test this resilience beyond the forecast period. 

This edition of the FSR also includes the SARB’s revised credit-to-gross domestic product (GDP) gap and a summary of the results from the 2024-2025 Climate Risk Stress Test (CRST).