Standard Bank continues to dominate market share of SA’s R11-trillion banking sector, with data indicating new digital-led lenders have a lot of road to cover to dent the dominance of the country’s top four banks.
Data from the SA Reserve Bank shows the country’s banking sector had R5.1-trillion in advances at end-2023 and deposits of R5.7-trillion.
Standard Bank, or the “Big Blue” as the bank is referred to due to the sheer size of its balance sheet, has a leading market position on both fronts. The data shows the group led by Sim Tshabalala has a 24.9% market share of advances, followed by FirstRand and Absa, with 21.9% and 21.8%, respectively. Nedbank has 16.5% of the pie.
Regarding deposits, Standard Bank has a 22.5% share, followed again by FirstRand and Absa, with both on 21.6% market share, and Nedbank with 17.3%.
Nedbank, which is undergoing a leadership transition, said it planned to grow its market share, particularly using its digital products.
The lender on Friday released its 2023 annual report, in which it reflects on the increasing competition in the industry.
The sector in the past five years has experienced an entry of several new players such as Discovery Bank and TymeBank, with Nedbank’s former major shareholder, Old Mutual, set to open its own bank in 2024.
SA’s telecommunications have also aggressively expanded into attractive banking profit pools, with their primary focus on transactional services, insurance and deposits.
Patrice Motsepe-backed TymeBank has grown to 8.5-million customers since its launch five years ago. Discovery Bank, which is about to compete in the lucrative home loan market, has recently achieved operational break-even.
Nedbank said the impact of the new players has been mixed.
No gains
“The number of clients gained by new entrants has been impressive, but incumbent retail banks, in general, have not seen material client losses. This implies that retail clients have become multibanked and that much of the growth has come from previously low-revenue-generating unbanked consumers,” Nedbank said.
“From a balance sheet perspective there has been no material lending or deposit market share gains. New entrants are likely to expand into more sophisticated lending products over time that comes with additional operational complexity, credit risk and capital requirements.”
Tshabalala has also said competition in the sector still comes from the usual suspects.
“Contrary to predictions made during the 2010s, incumbent financial institutions remain our fiercest competitors. New competitive pressures are coming not from narrow fintechs but from broader digital banks, insurers and asset managers,” he said in the group’s annual report released in April.
Standard Bank Group was recently named as the Best Bank in Africa in Global Finance’s 31st World’s Best Banks 2024 Awards.
The lender was also named as the best bank in Malawi and SA.
One area in which the players and a revived African Bank are looking to take market share from the established players is the small business lending sector, dominated by FirstRand’s FNB.
African Bank is in the final stages of developing a digital lending product aimed at small, medium and micro enterprises (SMMEs). African Bank in 2023 beefed up its fledgling business banking proposition after buying Sasfin Bank’s commercial equipment finance and commercial property finance units in a R3.2bn deal.
Capitec, the country’s biggest retail bank by customer size, in 2019 bought Mercantile Bank from Portuguese state-owned banking group Caixa Geral de Depósitos in a R3.5bn deal. It has since rebranded the entity into Capitec Business.
Investec, known for its commercial banking prowess, has also indicated its plans to double its market share in the business banking space in the next two years.
“Business-SME banking is generally expected to be the next battleground, as evident in incumbents bolstering their digital capabilities and nontraditional competitors acquiring smaller SME banks, such as Capitec’s acquisition of Mercantile Bank,” Nedbank said.
“Nedbank has a strong position in this market through our Retail Relationship and Commercial Banking units, with the threat more focused on the lower end of the market.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.