Banking sector developments  South African banks have been largely shielded against the direct effects of the global financial crisis. Apart from a sound regulatory framework, reasons were, among others, the fact that domestic banks had not invested heavily in high-risk securities or complex structured products and had very limited foreign credit exposure in their loan books.
Not surprisingly, though, the banking sector’s operating environment deteriorated, as a result of the adverse economic developments both in South Africa and internationally. This was felt by banks mainly through continuously rising credit impairments. Impaired advances as a percentage of gross loans and advances increased to 5,5 per cent at the end of June 2009 from 2,3 per cent in January 2008.