SHARES of the big four banks, except Absa, are seemingly recovering from the knock they took after Absa posted a poor trading update on June 26.

The recoveries by FirstRand, Nedbank and Standard Bank could be a sign that the bad news about impairments is specific to Absa's mortgage book.

Nedbank's share price had risen 22,7% for the year to date before Absa's trading update was announced. As of yesterday, its share price is 20,4% up, which is 2% lower than its peak before the Absa news.

FirstRand's share price had increased 33% for the year to date before the Absa update and its year-to-date increase as of yesterday was 29,2%, which is three percentage points lower than it was before Absa issued its update.

Standard Bank's share price had increased 16,5% before Absa's news. For the year to date a s of yesterday, it had risen 13,4%.

Naturally, Absa has been the most affected. It is the worst performing of the big four banking stocks.

Before it issued the trading update, which estimated earnings would be as low as 10% in the six months to end-June, Absa's year-to-date share price increase had been 11%. But as of yesterday its share price for the year to date was 3% down.

"I think Absa was one that took the biggest knock. I think people realised that it's an Absa specific issue," said Faizal Moolla, a financial analyst at Avior Research.

"I am not going to change my recommendations on Absa as yet until I talk to management."

Mr Moolla has given Absa an "underperform" rating, but has an "outperform" rating on Standard Bank and FirstRand.

"We believe that Standard Bank and FirstRand offer a better option," he said. Mr Moolla has a 12-month price target of R30,88 on FirstRand and R133 on Standard Bank.

He said that although Nedbank had turned around its retail unit, there was not much upside coming in the future.

However, despite the recoveries from the other three big banks after Absa's poor trading update, local unsecured lenders Capitec and African Bank Investment Limited (Abil) have not recovered as much.

But analysts have de-linked the lack of a strong recovery in the unsecured lenders' shares to the poor Absa trading update.

The view is that Absa's problems are specific to its mortgage book, hence the recovery of other banks.

Capitec's share price had gained 22% in the year to date before Absa's trading update.

But as of yesterday, its year to date increase was 13,4%. This means Capitec has fallen 8,6 percentage points since Absa's trading update.

Abil's stock had added 8,3% for the year to date before the news from Absa. Now it has a year-to-date gain is just 1,9% - a decrease of 6,4 percentage points since Absa issued its trading update.

"Somebody out there is taking a breather from the unsecured lending," Vestact CEO Paul Theron said.

ndzamelap@bdfm.co.za