The banking landscape in South Africa is set for a massive shift in 2017, with Capitec Bank set to become the country’s third-largest bank in terms of customer numbers.
This is according to a report by rating agency Standard and Poor’s, which noted that Capitec has disrupted the banking sector in recent years to become a “serious challenger in the mass and middle market retail banking space”.
Capitec started out as a microlender and then secured a banking licence before positioning itself as a low-cost operator that made banking easier, faster and cheaper to low-income consumers.
“As of February 29, 2016, the bank reported 7.3 million active retail clients (approximately 17.5% of the total market), up from 1.5 million in 2009,” S&P said.
“We expect the bank’s rate of customer acquisition will slow down, but we still believe it could become the country’s third-largest bank in terms of customer numbers by end-2017,” it said.
Other South African banks
South Africa’s biggest bank by clients its Standard Bank – a position it has held for a number of years, having usurped Absa. At December 2015, the bank said it had 11.6 million personal and business banking customers.
Absa, trading as Barclays Africa, has seen only a small increase of around 200,000 South African customers in the past financial year, with 9.4 million clients at December 2015.
However, Absa remains the second biggest bank, as a ‘write down’ of banking customers in 2015 ( in which accounts were reclassified as dormant) saw FNB drop from 7.3 million customers to 7.1 million.
According to Ryan Prozesky, CEO of Value Banking Solutions at FNB, as at December 2015 (FNB’s interim period), the bank had 7.2 million customers.
The bank said that it only includes accounts that are recently active (customer initiated transactions), excluding automated transactions such as interest payments.
South African banking customers (December 2015)
|Bank||FY 2013/14 customers||FY 2014/15 customers||FY 2015/16 customers||YoY Change (2014-2015)|
|Standard Bank||10.4 million||11.1 million||11.6 million||+4.5%|
|Absa Bank||8.6 million||9.2 million||9.4 million||+2.2%|
|Nedbank||6.7 million||7.1 million||7.4 million||+4.2%|
|Capitec||5.8 million||6.2 million||7.3 million||+17.7%|
|FNB||7.6 million||7.3 million||7.2 million*||-1.4%|
* Interim, December 2015
Ratings firm S&P said that the way in which banks offer products and services to retail sector is likely to become increasingly competitive, especially in the transactional space, over the next few years.
News24 reported that analysts believe Capitec needs to do more than simply grow the number of transactional customers to fully threaten the territory of the big four banks. It would need to focus on diversifying its revenue streams to include vehicle finance and credit card offerings, as well as branching into corporate investment banking.
Capitec has however picked up a number of customer related accolades in recent months including the title of best bank in the world in the global Lafferty Bank Rating. It was also ranked the best bank in South Africa for the fourth year running by the SA Customer Satisfaction Index (SACsi).
Barclays Africa Group, which includes Absa, claimed in March that there is no lack of interest from buyers seeking a stake in the company after Barclays announced that it will be selling down its stake to less than 20% over the next two to three years – from 62%.
The Financial Times recently reported that regulators are expected to block any attempt of a merger deal between Barclays Africa and other local banks, including Nedbank and FirstRand.
“As a regulator, we would not be comfortable with private equity play for any of the banks,” deputy governor Kuben Naidoo said at a press conference in Pretoria this week.
In March, Old Mutual confirmed that it will split up its four main business units, including Nedbank.