South African Bank Stocks Gain on Bullish Goldman Coverage (FSR, CPI, ABG, NED, SBK)

South African banking stocks experienced a wave of positive momentum following the initiation of coverage by Goldman Sachs. The firm's analysis pointed to a sector poised for growth, driving increased investor interest and market activity.

FirstRand, Capitec Bank, and Absa Group received “Buy” ratings from Goldman Sachs, accompanied by price targets of ZAR 92, ZAR 4,818, and ZAR 236, respectively.

Standard Bank and Nedbank were assigned “Neutral” ratings, with price targets of ZAR 272 and ZAR 255.

The ratings reflect Goldman Sachs' perspective that South African banks are approaching a “significant inflection point,” characterized by easing macroeconomic pressures and a promising near-term growth outlook.

Capitec Bank's recent performance has been particularly noteworthy. The bank has surpassed FirstRand to become Africa's most valuable bank, with a market capitalization reaching R424 billion as of August 2025, exceeding FirstRand's R420 billion. Capitec's success is attributed to its business model, which emphasizes accessibility, affordability, and customer experience.

The bank's early adoption of digital platforms and its client-centric approach have resonated with a tech-savvy generation, contributing to its rapid expansion. Despite having lower revenue and net income compared to its peers, Capitec's high valuation reflects investor confidence in its continued growth trajectory.

Nedbank, while maintaining a steady course, faces challenges in scaling its operations. With 3.6 million main-banked clients, it is smaller compared to competitors like Absa, which has approximately double Nedbank's client base.

Analysts suggest that Absa's larger retail bank and African footprint offer more potential for upside. Nedbank's market capitalization has fluctuated between R95 billion and R125 billion over the past year, indicating a need for strategic initiatives to enhance its market position. The Goldman Sachs neutral rating may reflect the need for Nedbank to find such a catalyst to unlock additional value.

The initiation of coverage by Goldman Sachs, particularly the “Buy” ratings for FirstRand, Capitec, and Absa, signals a growing confidence in the South African banking sector's prospects. Capitec's ascent, the overall market rally, and strategic considerations for banks like Nedbank highlight the dynamic nature of South Africa's banking landscape. The sector appears poised for continued growth amid evolving economic conditions, making it an area of increasing interest for markets.