One of Absa CEO Daniel Mminele’s first tasks after he took over in January last year was to preside over celebrations in Ghana and Kenya as the group’s operations across Africa shed their old Barclays blue and replaced it with Absa’s red, pink and orange.
He planned to pay visits to a lot more of Absa’s businesses.
Then Covid came to SA, and the country went into lockdown.
“It was a busy year, a challenging year — a year which was very different to what I had expected,” Mminele said in an interview after Absa released its 2020 financial results this week. He said the results reflected the underlying momentum and resilience of the business, and the level of collaboration and agility in the bank’s leadership.
“It was about ensuring we did what was best for the safety and health of our staff, all while keeping the business operating and financially stable and moving to a more defensive pose, preserving capital and managing credit and liquidity risks,” he said.
If Covid-19 and its challenges dominated the year, this was also the year in which Absa completed the complex process of separating from its former parent Barclays, on time and more than R1bn below budget despite lockdowns in many of the countries in which it operates.
And it reviewed the growth strategy it had put in place in 2018 in the light of the pandemic, using this as a window of opportunity to think about how to thrive in a post-Covid world and putting in place a “refreshed” strategy.
Insiders said it is just as well that UK-based Barclays dumped its South African and African subsidiary, as it rather unceremoniously did in 2016 — Absa could never have managed the challenges of the Covid crisis in the agile way it did if it had still had to contend with London making the rules and setting the risk parameters.
It was a busy year, a year which was very different to what I had expected.
The group’s ability to deal with the crisis was also enhanced by the separation process itself, which at peak involved 1,300 people working on 273 projects.
Mminele said it had not only enhanced many of the group’s systems and refreshed its branding, but crucially it “bolstered our skills in executing large projects, which has begun paying dividends many times over especially during Covid-19".
And even though Absa was in defensive mode last year and cautious about growing its loan book, seeking “smart growth” rather than growth at any cost, it has continued to regain the market share it had lost over a decade under Barclays’ beady and risk-averse eye.
In home loans, for example, Absa’s share of “front book” (new) business had sunk from 34% at its peak to just 16% on the eve of Barclays’ departure; it is now back at 23% and edging up towards 25% or so, where it should ideally be.
But there’s still much work to do, not only in retail and business banking but also in the corporate and investment bank, which makes up 36% of the group’s total revenue, a ratio that is below Absa’s peers, and below Absa’s own target of 40%, CFO Jason Quinn noted this week.
Amid the welter of high-level terminology banks typically use to talk about their strategy, it’s hard to see exactly how much Absa has shifted from the strategy it put in place under former CEO Maria Ramos in 2018 after the Barclays exit.
Mminele emphasised that it is about consolidating and building on the 2018 strategy and taking forward those elements that are showing traction — but at the same time taking into account the changes wrought by Covid-19 in customer behaviour, as well as the way the crisis has accelerated digitisation.
He spoke about tailoring banking to customers’ preferences and evolving towards the “hyper-personalisation” of services to customers and being able to respond rapidly to anticipate what they need.
It’s about “how we inject ourselves into customers’ lives and offer more than the traditional banking offering, taking into account how and when and where customers want to interact with us”, he said.
The group will look at partnerships that could enable it to add an array of “beyond banking” products or services to its banking platforms and grow its fee income.
And with its aspiration to be a leading pan-African banking group still firmly in place — and its Africa regions now making up 25% of its revenues — it is still looking for opportunities to grow within its existing footprint on the continent as well as into new regions.
Mminele noted this week that while the group is well represented in East and Southern Africa, it is less so in West and North Africa and growth continues to be part of the plan.
But if the year began with the celebratory renaming of the group’s African operations, it ended with the tragic loss to Covid-19 of Absa deputy CEO Peter Matlare, who was head of the group’s Africa regional operations.
Said Mminele: “We will find someone to assume his role and responsibilities. But we will not be able to replace Peter.”
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