There is a certain audacity to South Africa’s state-owned Postbank announcing that it has turned the corner, is heading into a bold new era of growth, and would the taxpayer mind awfully handing over R2.5bn to help it on its way?
Imagine if Standard Bank announced its annual results, reported a loss, acknowledged its technology was hopelessly outdated, and then casually mentioned that it had submitted a request to the National Treasury for a few billion rand to upgrade its systems. The response would be immediate, and much of it unprintable.
Yet this is essentially what Postbank has done, with a straight face and an impressive collection of management euphemisms.
Postbank says it has moved from “stabilisation” into its “next phase of growth”. Its cost-to-income ratio improved to 103.8%, against a target of 123%. For readers unfamiliar with banking, a ratio above 100% means the bank is spending more on operations than it generates in the income measured by that ratio. Celebrating 103.8% against a target of 123% is a little like congratulating yourself on crashing the car at 103km/h when you had budgeted to crash it at 123km/h.
The bank reported a net loss of R5.2m, though it says that excluding a R44.5m interest charge relating to a historical Sars matter, it would have made a pretax profit of about R42m. Fair enough. But net interest income declined from R690.8m to R646.9m, while noninterest revenue was a distinctly unimpressive R60.4m.
It has R10bn in assets, R9.45bn in customer deposits and just R249.6m in shareholder equity. Its capital adequacy ratio has reportedly fallen to just 1.62%, a figure conspicuously absent from the celebratory press release.
To be fair, there has been progress. Postbank has received two successive unmodified audit opinions, its liquidity is strong, and management says it hasn’t missed a scheduled social grant payment in more than two years. These are meaningful achievements.
But there is a difference between becoming less dysfunctional and becoming commercially viable. The historical comparison is fascinating.
Postbank was profitable and growing in 2019, with a strong balance sheet and a great future strategy. At the time it was a division of SAPO. Then it was expropriated for no compensation, which was the first trigger in the demise of the entire SAPO Group. One can’t help wondering why they really wanted to do it.
In August 2019, Postbank had reported annual pretax profit of R496m, up from R296m the previous year. Net interest income was R515m. Seven years later, net interest income has increased by only 26% in nominal terms, meaning it has declined in real terms. And instead of making half a billion rand in pretax profit, Postbank is reporting a small loss.
The accounting and organisational structures have changed, so the comparison isn’t exact. But the direction is hardly an advertisement for the brilliance of the restructuring.
However, the government wanted to separate the bank and develop it into an independent commercial institution.
Government won. Seven years later, Postbank still hasn’t obtained its full commercial banking licence, its former parent has entered business rescue. One hesitates to describe this as a triumph of strategic foresight.
To make things more complex, postal banks exist around the world, and some are spectacularly successful.
Italy’s Poste Italiane has developed a remarkable financial-services business around its postal network. Its financial-services division generated €766m in net profit in 2025. The clever part is that BancoPosta doesn’t operate like an ordinary commercial lending bank. It gathers savings, distributes financial products and processes payments, frequently using partnerships rather than taking on conventional lending risks.
France chose another route. La Banque Postale evolved into a substantial, fully licensed banking and insurance group, reporting €1.6bn in attributable profit in 2025.
Britain has chosen something different again. Its post office provides banking services on behalf of commercial banks, while shared banking hubs allow customers to access financial services without requiring every bank to maintain its own branch. The participating banks help finance the system. The British have discovered that providing access to banking services doesn’t necessarily require the state to own a bank. What an extraordinary concept.
None of these models can simply be transplanted to South Africa, particularly given the parlous state of our postal network. But they demonstrate that there are several ways to achieve affordable banking.
And that brings us to Postbank’s developmental mandate.
There is a legitimate case for ensuring that rural residents, grant beneficiaries and poorer South Africans have access to financial services. But a developmental mandate is a reason to undertake a particular activity, not a general exemption from financial discipline.
Of Postbank’s requested R2.5bn, R2bn is intended for regulatory capital and R500m for infrastructure, systems and transformation. The total is roughly 10 times its current shareholder equity. That is an enormous wager on an institution whose commercial model remains uncertain.
Worse, Postbank has been losing the very customers it was established to serve. In 2019, it handled accounts for around 75% of social grant recipients. By 2025, fewer than 2-million ordinary recipients were using Postbank accounts, with the majority having migrated to commercial banks. The customers have been voting with their feet, or more precisely, their bank cards.
An efficient payments institution serving underserved communities could be a valuable public asset. But government needs to establish whether such services could be provided more cheaply through partnerships with existing banks, as other countries have demonstrated.
There is a crucial difference between financing a public service and capitalising a commercial bank. The first can legitimately cost taxpayers money. The second requires a credible prospect of generating returns.
Before Treasury writes a cheque for R2.5bn, it should establish whether Postbank needs a commercial banking licence at all, what its realistic commercial prospects are, and why the taxpayer should fund the creation of another competitor in an already sophisticated banking market.
