Challenges awaiting CEO-designate Kenny Fihla if he is to awaken the Absa “sleeping giant” include boosting its digital offering and retail banking division, analysts say.
Radebe Sipamla, co-portfolio manager at Mergence Investment Managers, said Absa’s online presence was a big weakness.
“Absa has spent billions on IT and technology, but it hasn’t translated into higher non-interest revenue and is behind the likes of Capitec, which is far ahead,” said Sipamla.
He said the Absa board, chaired by Sello Moloko, will need to give Fihla its full backing for him to make the difficult cultural and strategic changes that the bank needs if it is to navigate the rapidly changing environment in South Africa.
“Fintechs and non-traditional financial services are increasingly poised to make aggressive encroachments into Absa’s revenue streams,” Sipamla said. The South African Reserve Bank was adopting a more fluid payments regulatory framework, “which aims to increase competition and drive more transactions onto digital channels and away from costly cash payments”.
Absa’s revenue jumped 5% in 2024 to R109.9bn while headline earnings rose 10% to R22.1bn, bolstered by a reduction in retail impairments in South Africa.
Sipamla said Fihla would be well equipped to navigate Absa’s challenging internal politics given his background within corporates and government structures.
Fihla had “a great track record” having led Standard Bank’s corporate & investment banking (CIB) unit to become the leader in that space domestically and elsewhere in Africa.
Fihla, who resigned as deputy CEO of Standard Bank and CEO of Standard Bank South Africa this week just seven months after his appointment to the posts, will take the reins at Absa on June 17. He becomes Absa’s sixth CEO in less than six years and replaces Arrie Rautenbach, who took early retirement in October last year.
With Russon staying in a senior leadership role, Absa benefits from his deep institutional knowledge while Fihla takes the helm. Both are seasoned banking veterans, but Russon’s familiarity with Absa’s operations will be key to ensuring a seamless transition
— Shaakir Salie, research analyst at Aeon Investment Management
Charles Russon, head of CIB at Absa, has been serving as interim CEO and will “partner closely with Fihla to ensure a smooth leadership transition”, the bank said.
Sipamla said the market consensus had been that Absa was likely to keep Russon in the position for continuity, “but the Absa board opted to select the more strategically appropriate appointment, given the internal and external dissatisfaction with Absa’s transformation journey”.
Shaakir Salie, a research analyst at Aeon Investment Management, said Fihla’s appointment was unexpected but many investors had expected Russon’s tenure to be brief. He is 58.
“Continuity remains intact,” Salie said. “With Russon staying in a senior leadership role, Absa benefits from his deep institutional knowledge while Fihla takes the helm. Both are seasoned banking veterans, but Russon’s familiarity with Absa’s operations will be key to ensuring a seamless transition.”
Salie said retail banking remains a critical priority for the bank.
“While easing interest rates and improving macroeconomic conditions may yield increased retail lending growth, the market still expects Absa to lag its peers in this regard. Closing that gap should be high on Fihla’s agenda,” Salie said.
Independent analyst Chris Gilmour said Fihla’s priority would be to even out the weighting of Absa’s divisions. “Currently it’s dominated by CIB, it needs a better balance between all the various activities,” he said.
Sipamla said Absa had probably made Fihla an “extremely lucrative” offer, and the remuneration would be combined with the “exciting challenge ... of turning around the sleeping giant that Absa is”.
He said Fihla’s deputy CEO vacancy at Standard Bank could be filled by Funeka Montjane, given her strong, long-standing working relationship with CEO Sim Tshabalala.
“Her appointment would send a positive signal to investors and the country at large about Standard Bank’s commitment to diversity and the empowerment of female executives, as the group is yet to have a female occupy the deputy CEO position in its 100-year history.”
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