Business

PSG Warns South Africa: Strong Profits, Weak Reform Could Derail Growth

Published

2 hours ago

October 16, 2025

Chiraag

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Signs of Progress, But Risks Remain

South Africa’s economy might finally be showing flickers of recovery, but one of the country’s biggest finance houses has issued a reality check. PSG Financial Services, valued at over R30 billion, says that while markets are looking more favourable and business confidence is creeping back, the country cannot rely on optimism alone.

In its interim financial results for the six months ending 31 August 2025, PSG reported impressive growth across its divisions, from wealth management to insurance, but warned that South Africa’s long-term stability hinges on bold reforms and stronger policy execution.

Strong Results in a Shaky Economy

Despite what the group called “challenging operating conditions,” PSG delivered a 19% increase in total assets under management, climbing to R517.6 billion. This includes R448.9 billion managed by PSG Wealth (up 18%) and R68.7 billion under PSG Asset Management (up 21%). PSG Insure also grew, recording R4 billion in gross written premiums, a 6% rise.

Financially, the company’s core income rose 18% to R3.95 billion, while headline and recurring headline earnings jumped 19% to R726 million. Return on equity improved to 28.6%, compared to 26.2% a year earlier, and the group declared a dividend of 28.6 cents per share.

CEO Francois Gouws said the results reflect PSG’s “advice-led” business model, one that depends on human expertise as much as technology. The group increased spending on digital infrastructure by 15% and kept fixed remuneration costs growth to 5%, a balance aimed at future-proofing the company while maintaining profitability.

A Cautious Message to Policymakers

Yet behind the strong numbers lies a sober warning. PSG says South Africa’s economy, after “a decade of subdued growth,” is finally showing cautious optimism, but that optimism is fragile.

The group’s statement outlined the main obstacles still throttling progress: energy shortages, logistics bottlenecks, and high unemployment, all of which continue to erode productivity and investor confidence. It also pointed to global uncertainties, including volatile markets and geopolitical risks, as added headwinds for South African growth.

While the Government of National Unity (GNU) and growing public-private partnerships have been encouraging, PSG’s message is clear: without meaningful reform, the current momentum could fade. “The country stands at a crossroads,” the report noted, “where reform-driven momentum is balanced against persistent structural challenges.”

More Than Numbers

Beyond its financial success, PSG’s latest message carries a wider resonance. It reflects the growing sentiment among South African business leaders that real growth will not come from market performance alone. It will come from fixing what’s broken: the power grid, the ports, and the red tape, and from policy decisions that empower both the private sector and the workforce to perform.

If anything, PSG’s results show what’s possible even in difficult conditions. But they also remind South Africa’s leadership that resilience is not the same as reform. The numbers may be rising, but the country’s true turnaround will depend on what happens next.