SA's banking sector needs to recover "sticky" non-performing loans, determine where lending growth is going to come from and resolve the question of a potential bubble in the unsecured market, according to Matthew Pirnie, associate director of financial institution ratings at S&P Ratings Services.
However, he said on Thursday the sector had a number of strengths too, like its conservative regulators, the good co-operation and risk management of major banks and the fact the country had adequately capitalised, profit-making banks.
He was also impressed by little international liability exposure, and increasing asset diversification.
But long-term challenges entailed altering the funding of the banking system and the role of the "shadow" banking sector - intermediaries overseeing credit creation but with limited oversight, or unregulated activities of regulated institutions.
Pirnie was also concerned the infrastructure/social gap was causing potential instability.