Nedbank is shaking up its retail and business banking divisions as it aims to “become competitive on the streets” and defend its market share against competitors.
Group CEO Jason Quinn said Nedbank was hoping to eat its competitor's lunch through the restructuring.
“Absolutely that is exactly why we are doing this. To be honest it is also to defend us against new entrants. So, we know that Capitec is also moving into business and commercial banking with very specific segments around us. It is to be competitive on the streets, is the way I would describe it”.
Capitec has invested heavily in the growth of its portfolio, helping create a diversified financial services group that offers personal and business banking, value-added services, insurance, a prepaid mobile service and secure payment solutions; among others.
In response, Nedbank is breaking up its retail and business banking (RBB) division into personal and private banking — which will include insurance and wealth management — and a business and commercial banking unit to focus on SMEs, commercial and mid-corporation clients.
We see business and commercial banking as huge opportunities, we need to invest in it.
— Jason Quinn, Nedbank Group CEO
“It is always the right thing to announce organisational change in a positive sense, which is what this is, in a company that is performing. A year ago, you heard me talk about portfolio optimisation at Nedbank; in other words, we have big businesses already that are doing well with great shares and great returns. We have others that are smaller that we want to grow, so everything is in the context of trying to serve our customers better and to generate more revenue growth.”
Quinn said the restructuring was not a cost-cutting exercise and no jobs would be affected.
“This is not a job loss exercise. This is an exercise around improving our client centricity”.
Quinn said they were also growing the commercial and SME segments, which were the fastest growing in the economy.
“We see business and commercial banking as huge opportunities, we need to invest in it, we have a nice business there. We have just launched the mid-corporate business, and in the middle segment there is commercial banking. We know the parts of the economy that are growing are the commercial segments, SMEs are going to be there. Right from small businesses up to the big corporations will be served out of one segment”.
The retail banking side will house from entry-level banking to the top of the wealth segment with all of its products, distribution and coverage.
“The private bank wealth business that we had previously was a nice business, but our market share there dropped to 3%. We are looking to invest in it and grow it in one segment. Insurance moves into private banks as well. For years we have tried to cross our insurance from one cluster into another, I don't think we always got that right. We will have to invest, we need more coverage bankers, we have to do product innovation, we have an amazing offshore and I think we can sell better into our customer base in South Africa. Everything about this is about client centricity”.
During the year under review, Nedbank increased headline earnings by 8% to R16.9bn, while return on equity strengthened to 15.8%, from 15.1%.
A final dividend of 1,104c per share was declared, up 8%, bringing the total dividend to 2,075c, up 10% from the previous year.
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