The Banking Industry South Africa

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The Banking Industry in South Africa 2024

Stephen Timm | South Africa | 18 April 2024

The Banking Industry in South Africa 2022

Carole Veitch | South Africa | 26 September 2022

The Banking Industry in South Africa 2021

Carole Veitch | South Africa | 16 March 2021

The Banking Industry in South Africa 2019

Louise Mitchell | South Africa | 06 September 2019

The Banking Industry in South Africa 2018

Louise Mitchell | South Africa | 03 August 2018

The Banking Industry in South Africa 2017

LOUISE MITCHELL | South Africa | 06 April 2017

The Banking Industry in South Africa 2016

Louise Mitchell | South Africa | 31 March 2016

The Banking Industry in South Africa 2015

Martin Rothschild | South Africa | 03 February 2015

Report Coverage

This report on the banking industry in South Africa covers central banking, stokvels, development banks, commercial and mutual and co-operative banks and other credit providers. It includes information on the size of the industry such as number of banks, customers, and major performance stats including loans and impairments. It covers the state of the industry, digital banking, economic effects on the industry, financial sentiment and stability, notable players, corporate actions and influencing factors. There are profiles of 82 companies including major players such as Absa, FirstRand, Standard Bank, Nedbank, Investec and Capitec, digital banks such as Bank Zero and TymeBank, international players such as BNP Paribas, development banks such as the Development Bank of Southern Africa and leasing companies such as the financial services arms of Toyota and BMW.

Introduction

• The banking sector is well capitalised and its capital adequacy and liquidity ratios have remained well above minimum statutory requirements.
• The slowing economy and increased cost of living have seen consumer lending slow, and banks are looking to the rest of Africa to generate better returns.
• Despite this, higher interest rates have lifted interest income.
• The sector is dominated by the five largest banks which hold about 90% of total banking sector assets.
• Risks include the increase in impaired advances, the setting up of a state bank and higher transaction costs.
• The major banks are facing increasing competition from digital banks, and increasing pressure to reduce financing of fossil fuel projects and increase sustainable financing.

Trends

• Banks are increasingly looking to service micro and township businesses
• Digitisation of banking, which could increase financial inclusion and reduce operating costs.
• Growing use of loyalty cards.
• Increasing focus on recruiting people with digital skills.
• Local banks are increasingly focusing on the rest of Africa as lending slows and impairments rise locally.
• Sustainable finance and green bonds are growing, while there are increased demands to reduce financing of fossil fuel projects.
• The poor economy and high cost of living has slowed demand for finance.

Opportunities

• Assisting SMEs with enterprise development and supplier development.
• Expansion of the major banks into the growing African corporate and investment banking market.
• Financing of small businesses.
• The development of digital banking products and apps.
• The inclusion of unbanked low-income earners.
• The regulation of cryptocurrency could allow for the development of new banking channels.

Challenges

• Banking-related corruption, crime and fraud, including cybercrime and money laundering.
• Climate change-related shocks.
• Concern about state banks and contagion in the banking system.
• Criticism of high executive pay.
• Grey-listing could increase transactional banking costs.
• Impairments are growing as the number of indebted consumers rises.
• Increased emigration could compound skills shortages.
• Loadshedding costs.
• Reputational risk from financing fossil fuels and failing to increase sustainable finance.
• The commercial banking sector is dominated by major players and is highly concentrated.
• The Competition Commission’s rand fixing case against the banks has highlighted the government’s mistrust in private banks.
• Wealth banking is being affected by emigration.

Outlook

• Credit conditions are expected to remain tight in 2024.
• Non-performing loans will likely remain elevated.
• The sector is expected to maintain strong risk-adjusted returns, supported by net interest margins and transactional revenue.
• While major local banks’ balance sheets remained resilient, the outlook is uncertain.
• Technological disruption and competition from non-traditional players will continue to affect bank strategy.
• Climate change is expected to create significant opportunities for balance sheet growth and innovative sustainable financing solutions.

The Banking Industry in South Africa 2024

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Industry Landscape

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Historical Reports

The Banking Industry in South Africa 2022-09-26

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The Banking Industry in South Africa 2021-03-16

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The Banking Industry in South Africa 2019-09-06

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2018-08-03

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The Banking Industry in South Africa 2017-04-06

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The Banking Industry in South Africa 2016-03-31

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2015-02-03

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		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1	Industry Value Chain	9
2.2	Geographic Position	11
2.3	Size of the Industry	12
3.	LOCAL	19
3.1	State of the Industry	19
3.1.	Key Trends	28
3.2	Key Issues	29
3.3	Notable Players	29
3.4	Corporate Actions	32
3.5	Regulations	37
3.6	Enterprise Development and Social Development	39
4.	AFRICA	40
5.	INTERNATIONAL	43
6.	INFLUENCING FACTORS	46
6.1	Economic Environment	46
6.2	Labour	47
6.3	Environmental Issues	50
6.4	Technology, R&D, Innovation	51
6.5	Government Support	57
6.6	Input Costs	60
6.7	Financial Inclusion	61
6.8	Crime	63
6.9	Greylisting	65
7.	COMPETITIVE ENVIRONMENT	66
7.1	Competition	66
7.2	Ownership Structure of the Industry	69
7.3	Barriers to Entry	70
8.	INDUSTRY SUMMARY	71
9.	OUTLOOK	72
10.	INDUSTRY ASSOCIATIONS	72
11.	REFERENCES	73
11.1	Publications	73
11.2	Websites	75
	ANNEXURE 1 – Relevant Legislation	77
	APPENDIX 1 - Summary of Notable Players	88
	COMPANY PROFILES	103
	Absa Bank Ltd	103
	Access Bank South Africa Ltd	108
	African Bank Ltd	110
	African Dawn Capital Ltd	112
	Albaraka Bank Ltd	115
	Bank of China Ltd (Incorporated in China)	118
	Bank of Taiwan Co. Ltd	122
	Bank Zero Mutual Bank	126
	Barko Financial Services (Pty) Ltd	127
	Bayport Financial Services 2010 (Pty) Ltd	129
	BetterHome Group Ltd	131
	Bidvest Bank Ltd	133
	BNP Paribas Ltd (Incorporated in France)	136
	BNP Paribas Personal Finance South Africa Ltd	138
	British Airways PLC	141
	C T International Financiers (Pty) Ltd	145
	Capital Harvest (Pty) Ltd	147
	Capitec Bank Ltd	149
	China Construction Bank Corporation (Incorporated in China)	152
	Citibank NA (Incorporated in the United States of America)	155
	Clicks Group Ltd	158
	Deutsche Bank AG	162
	Development Bank of Southern Africa	184
	Diners Club (S A) (Pty) Ltd	188
	Dis-Chem Pharmacies Ltd	190
	Discovery Ltd	196
	Discovery Vitality (Pty) Ltd	201
	Ditsobotla Primary Savings and Credit Co-Operative Bank Limited Primary Co-Operative	203
	Exclusive Books Group (Pty) Ltd	205
	Finbond Group Ltd	207
	FirstRand Bank Ltd	211
	Foschini Group Ltd (The)	216
	Fundi Capital (Pty) Ltd	222
	Gauteng Enterprise Propeller	224
	GBS Mutual Bank	227
	Grindrod Bank Ltd	229
	HBZ Bank Ltd	232
	HSBC Bank PLC (Incorporated in the United Kingdom)	235
	iMasFinance Co-Operative Limited Primary Co-Operative	238
	Industrial Development Corporation of South Africa Ltd	241
	Investec Bank Ltd	251
	Ithala Development Finance Corporation Ltd	255
	JP Morgan Chase Bank N A Johannesburg Branch	258
	Land and Agricultural Development Bank of South Africa	261
	Lewis Group Ltd	264
	Mahala Loyalty Program (Pty) Ltd	268
	MTN Group Ltd	270
	National Youth Development Agency (The)	274
	NBC Holdings (Pty) Ltd	276
	Nedbank Ltd	279
	Old Mutual Finance (RF) (Pty) Ltd	288
	Ooba (Pty) Ltd	290
	Oranjekas Spaar en Krediet Kooperatief Beperk Primary Co-Operative	293
	OSK Kooperatiewe Bank Beperk Primary Co-Operative	295
	Phakamani Foundation NPC	297
	Pick n Pay Stores Ltd	299
	Primedia (Pty) Ltd	304
	Retailability (Pty) Ltd	308
	SA Home Loans (Pty) Ltd	310
	SA Taxi Development Finance (Pty) Ltd	312
	Sasfin Bank Ltd	314
	SaveAct Trust	317
	Small Enterprise Finance Agency Ltd	319
	Small Enterprise Foundation NPC (The)	323
	South African Airways SOC Ltd	326
	South African Reserve Bank	330
	Spot Money SA (Pty) Ltd	334
	Standard Bank of South Africa Ltd (The)	336
	Standard Chartered PLC	341
	Suid-Afrikaanse Poskantoor SOC Ltd	345
	Thuthukani Financial Services Holdings (Pty) Ltd	348
	Transaction Capital Ltd	350
	Tyme Bank Ltd	354
	Ubank Ltd	356
	Virtual Market Place (RF) (Pty) Ltd	358
	Vodacom Group Ltd	360
	Wellness Warehouse (Pty) Ltd	365
	Woolworths Financial Services (Pty) Ltd	367
	Ziphakamise Savings and Credit Co-Operative Bank Limited Primary Co-Operative	370

Report Coverage

This report covers the banking industry in South Africa including the major commercial banks, development banks, central bank, digital banks, microfinancing and stokvels. It includes comprehensive information on the size and state of the sector, industry statistics and performance indicators, rankings, corporate actions and other developments. There are profiles of 81 companies including the major banks such as FirstRand (FNB), ABSA, Standard, Nedbank, Capitec and Investec, development banks such as the Land Bank and relatively new players such as TymeBank and Bank Zero.

Introduction

• South Africa’s banking sector is well capitalised and its capital adequacy and liquidity ratios have remained well above minimum statutory requirements.
• In the year to end-March 2022 the sector recorded increased assets, gross loans and advances, investment and trading securities and short-term negotiable securities.
• Profitability improved significantly.
• However, the operating environment remains highly volatile and the sector is facing elevated domestic and global risks.
• These include a possible greylisting over South Africa’s failure to implement adequate measures to prevent illicit money flows.

Strengths

• Stokvels are effective savings and investment instruments.
• The banking sector is stable and well capitalised.
• The level of formal financial inclusion is 91%, and 81% of South Africans aged 16 years and over have a commercial bank account.
• The major banks have well-diversified product portfolios and broad geographical reach.
• The South African banking system is well regulated and is regarded by the International Monetary Fund as one of the best banking systems in the world.

Weaknesses

• Capital requirements that determine how banks allocate credit tend to work against small businesses and poor people.
• The commercial banking sector is dominated by five major players and is highly concentrated.

Opportunities

• Expansion of the major banks into the growing African corporate and investment banking market.
• The development of digital banking products and apps.
• The inclusion of unbanked low-income earners.
• The R50bn a year stokvel savings pot can be leveraged to finance small business development.
• The regulation of the cryptocurrency market could allow for the development of new banking channels.

Threats

• Ballooning national debt poses a threat to financial stability.
• Banking-related corruption, crime and fraud, including cybercrime and money laundering.
• Climate change-related shocks.
• Domestic and global macroeconomic pressures.
• Further waves of COVID-19.
• The impact of the war in Ukraine on inflation.
• The threat of South Africa’s grey-listing over inadequate measures to combat money laundering.

Outlook

• The Reserve Bank expects banks and financial institutions to remain resilient with adequate capital buffers to absorb shocks.
• With inflation and interest rate increases, and as consumers and businesses come under increased pressure, analysts predict that the risk of non-performing loans will rise.
• Analysts expect climate change to increasingly impact financial stability and monetary policy.
• The rise of digital banking will continue to drive the demise of in-person banking.

The Banking Industry in South Africa 2022

Full Report

R 6 500.00(ZAR) estimated $355.05 (USD)*

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Industry Landscape

R 4 550.00(ZAR) estimated $ 248.53 (USD)*

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Historical Reports

The Banking Industry in South Africa 2024-04-18

R 20 000.00(ZAR) estimated $1092.45 (USD)*

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The Banking Industry in South Africa 2021-03-16

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2019-09-06

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2018-08-03

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2017-04-06

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2016-03-31

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2015-02-03

R 1 900.00(ZAR) estimated $103.78 (USD)*

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[ Close ]

		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1.	Industry Value Chain	9
2.2.	Geographic Position	11
2.3.	Size of the Industry	13
2.4.	Key Success Factors and Pain Points	17
3.	LOCAL	18
3.1.	State of the Industry	18
3.2.	Key Trends	24
3.3.	Notable Players	25
3.4.	Corporate Actions	29
3.5.	Regulations	32
3.6.	Enterprise Development and Social Economic Development	37
4.	AFRICA	39
5.	INTERNATIONAL	43
6.	INFLUENCING FACTORS	45
6.1.	The War in Ukraine	45
6.2.	Economic Environment	47
6.3.	COVID-19	48
6.4.	Financial Inclusion	50
6.5.	Technology, Research & Development (R&D) and Innovation	51
6.6.	Government Support	54
6.7.	Labour	54
6.8.	Cryptocurrency	55
6.9.	Crime	55
6.10.	Environmental Issues	57
7.	COMPETITIVE ENVIRONMENT	58
7.1.	Competition	58
7.2.	Ownership Structure of the Industry	59
7.3.	Barriers to Entry	59
8.	SWOT ANALYSIS	59
9.	OUTLOOK	60
10.	INDUSTRY ASSOCIATIONS	61
11.	REFERENCES	62
11.1.	Publications	62
11.2.	Websites	63
	APPENDIX 1	65
	Summary of Notable Players	65
	COMPANY PROFILES	89
	Absa Bank Ltd	89
	Access Bank South Africa Ltd	93
	African Bank Ltd	95
	African Dawn Capital Ltd	97
	Albaraka Bank Ltd	99
	Bank of China Ltd	102
	Bank of Taiwan Co. Ltd	105
	Bank Zero Mutual Bank	108
	Barko Financial Services (Pty) Ltd	109
	Bayport Financial Services 2010 (Pty) Ltd	111
	BetterHome Group Ltd	114
	Bidvest Bank Ltd	116
	BNP Paribas Personal Finance South Africa Ltd	119
	BNP Paribas S.A.	121
	British Airways PLC	126
	C T International Financiers (Pty) Ltd	129
	Capital Harvest (Pty) Ltd	130
	Capitec Bank Ltd	132
	China Construction Bank Corporation	134
	Citibank N.A.	137
	Clicks Group Ltd	140
	Deutsche Bank AG	143
	Development Bank of Southern Africa	159
	Diners Club (S A) (Pty) Ltd	162
	Dis-Chem Pharmacies Ltd	164
	Discovery Ltd	172
	Discovery Vitality (Pty) Ltd	176
	Ditsobotla Primary Savings and Credit Co-Operative Bank Limited Primary Co-Operative	178
	Exclusive Books Group (Pty) Ltd	180
	Finbond Group Ltd	183
	FirstRand Bank Ltd	186
	Foschini Group Ltd (The)	190
	Fundi Capital (Pty) Ltd	194
	Gauteng Enterprise Propeller	196
	GBS Mutual Bank	198
	Grindrod Bank Ltd	200
	Habib Overseas Bank Ltd	203
	HBZ Bank Ltd	205
	HSBC Bank PLC	207
	ICICI Bank Ltd	209
	iMasFinance Co-Operative Limited Primary Co-Operative	212
	Industrial Development Corporation of South Africa Ltd	215
	Investec Bank Ltd	223
	Ithala Development Finance Corporation Ltd	227
	JPMorgan Chase Bank N.A.	229
	Land and Agricultural Development Bank of South Africa	231
	Lewis Group Ltd	234
	Mahala Loyalty Program (Pty) Ltd	237
	MTN Group Ltd	239
	National Youth Development Agency (The)	242
	NBC Holdings (Pty) Ltd	244
	Nedbank Ltd	247
	Old Mutual Finance (RF) (Pty) Ltd	254
	Ooba (Pty) Ltd	256
	Oranjekas Spaar en Krediet Kooperatief Beperk Primary Co-Operative	259
	OSK Kooperatiewe Bank Beperk Primary Co-Operative	261
	Phakamani Foundation NPC	263
	Pick n Pay Stores Ltd	264
	Primedia (Pty) Ltd	267
	Retailability (Pty) Ltd	270
	SA Home Loans (Pty) Ltd	273
	SA Taxi Development Finance (Pty) Ltd	275
	Sasfin Bank Ltd	276
	SaveAct Trust	278
	Small Enterprise Finance Agency Ltd	279
	Small Enterprise Foundation NPC (The)	282
	South African Airways SOC Ltd	285
	South African Reserve Bank	288
	Spot Money SA (Pty) Ltd	291
	Standard Bank of South Africa Ltd (The)	292
	Standard Chartered PLC	296
	Suid-Afrikaanse Poskantoor SOC Ltd	299
	Thuthukani Financial Services Holdings (Pty) Ltd	302
	Transaction Capital Ltd	304
	Tyme Bank Ltd	307
	Ubank Ltd	309
	Virtual Market Place (RF) (Pty) Ltd	312
	Vodacom Group Ltd	314
	Wellness Warehouse (Pty) Ltd	317
	Woolworths Financial Services (Pty) Ltd	320
	Ziphakamise Savings and Credit Co-operative Bank Limited Primary Co-Operative	322

Report Coverage

This report focuses on the banking industry in South Africa including stokvels. It includes comprehensive information on commercial and central banking, stokvels and other credit granting and lease financing organisations. The report provides information on the state and size of the sector, assets, loans and advances, regulation and corporate actions. There are profiles of 90 companies including the major banking groups such as FirstRand (FNB), Absa, Standard Bank, Nedbank and Capitec, credit-granting institutions including retailers, international banks operating in South Africa stokvels and home loan companies.

Introduction

The South African banking industry is regarded by the International Monetary Fund (IMF) as one of the best banking systems in the world and major local banks are highly rated by global banking consultancy Lafferty Group. The industry’s image, however, has been tarnished by a corruption scandal, which resulted in the collapse of VBS Mutual Bank. According to the South African Reserve Bank (Sarb), the banking industry’s total assets rose by 10.2% year-on-year to R6.5-trillion in September 2020. South African banks have played a critical role in the coronavirus pandemic response, providing more than R50bn in financial relief to financially distressed individuals and businesses. Stakeholders have reported a significant increase in non-performing loans as a result of the pandemic, and while local banks are well capitalised, analysts say that their creditworthiness could be threatened by South Africa’s crippling burden of debt. With savings totalling around R50bn in 2020, South Africa’s 810,000 pooled savings and investment clubs, (commonly known as stokvels), are an integral part of the country’s communal savings culture. The National Stokvel Association of South Africa estimates that more than 11 million adults are active stokvel members. Following the launch of FNB’s new stokvel banking product in February 2021, stakeholders say that informal savings and investment clubs are increasingly becoming part of the economic mainstream.

Strengths

• Stokvels are dynamic savings and investment instruments.
• The banking sector is stable and well capitalised.
• The level of formal financial inclusion has strengthened to 91% and 81% of South Africans aged 16 years and over have a commercial bank account.
• The major banks have well-diversified product portfolios and broad geographical reach.
• The sector is highly innovative.
• The South African banking system is well regulated and is regarded by the International Monetary Fund as one of the best banking systems in the world.

Weaknesses

• A large number of unregulated players operate in the informal microlending sector.
• Capital requirements that determine how banks allocate credit tend to work against small businesses and poor people.
• Stokvels are unregulated and members’ money is not secure.
• The commercial banking sector is dominated by five major players and is highly concentrated.
• The interdependency of the financial sector and the government represent a potential threat to financial stability.
• The sector has shed jobs as a result of branch closures by the major banks.

Opportunities

• Expansion of the major banks into the growing African corporate and investment banking market.
• The anticipated growth of Islamic banking locally and in the rest of Africa.
• The development of digital banking products and apps.
• The domestic home loans market.
• The inclusion of unbanked low-income earners
• The R50bn stokvel savings pot can be leveraged to finance small business development and promote greater financial mobility.
• The regulation of the cryptocurrency market could allow for the development of new banking channels.

Threats

• A potentially more devastating third wave of coronavirus.
• Ballooning national debt poses a threat to financial stability.
• Banking-related corruption, crime and fraud, including cybercrime.
• Climate change-related shocks.
• Domestic and global macroeconomic pressures.
• Further sovereign credit ratings downgrades, which could negatively affect the funding and liquidity of banks.
• Government’s land expropriation without compensation policy.

Outlook

South Africa’s banking system remained stable during the first and second waves of the coronavirus crisis, despite a significant increase in non-performing loans. Given the sector’s built-in capital and liquidity buffers, role players are confident that it will remain strong enough to weather an anticipated third wave of the pandemic and associated financial stressors. However, in its Financial Stability Review released in November 2020, the South African Reserve Bank highlights the risks associated with South Africa’s ballooning national debt, warning that the interdependency of the financial sector and the government represent a threat to financial stability. Although the roll-out of vaccines is underway, role players anticipate that the growth prospects of the banking sector and the domestic economy will remain constrained over the next three years. Segments that could offer significant growth potential include the domestic home loans market and stokvel investment and savings products.

The Banking Industry in South Africa 2021

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R 1 900.00(ZAR) estimated $103.78 (USD)*

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Industry Landscape

R 1 330.00(ZAR) estimated $ 72.65 (USD)*

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Historical Reports

The Banking Industry in South Africa 2024-04-18

R 20 000.00(ZAR) estimated $1092.45 (USD)*

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The Banking Industry in South Africa 2022-09-26

R 6 500.00(ZAR) estimated $355.05 (USD)*

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The Banking Industry in South Africa 2019-09-06

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2018-08-03

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2017-04-06

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2016-03-31

R 1 900.00(ZAR) estimated $103.78 (USD)*

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The Banking Industry in South Africa 2015-02-03

R 1 900.00(ZAR) estimated $103.78 (USD)*

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[ Close ]

		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1.	Industry Value Chain	8
2.2.	Geographic Position	9
3.	SIZE OF THE INDUSTRY	10
3.1.	Central Banking	11
3.2.	Commercial Banking	11
3.3.	Other Credit Granting	13
3.4.	Lease Financing	15
3.5.	Stokvels	16
4.	STATE OF THE INDUSTRY	16
4.1.	Local	16
4.1.1.	Corporate Actions	24
4.1.2.	Regulations	25
4.1.3.	Enterprise Development and Social Economic Development	31
4.2.	Continental	33
4.3.	International	38
5.	INFLUENCING FACTORS	42
5.1.	Coronavirus	42
5.2.	Government Interventions	45
5.3.	Economic Environment	46
5.4.	Financial Inclusion	47
5.5.	Operating Expenses	48
5.6.	Labour	49
5.7.	Cryptocurrency	50
5.8.	Technology, Research and Development (R&D) and Innovation	51
5.9.	Crime and Fraud	54
5.10.	Environmental and Social Concerns	55
6.	COMPETITION	57
6.1.	Barriers to Entry	58
7.	SWOT ANALYSIS	58
8.	OUTLOOK	59
9.	INDUSTRY ASSOCIATIONS	60
10.	REFERENCES	61
10.1.	Publications	61
10.2.	Websites	62
	APPENDIX 1	64
	Summary of Notable Players	64
	COMPANY PROFILES	86
	ABSA BANK LTD	86
	AFRICAN BANK LTD	91
	AFRICAN DAWN CAPITAL LTD	93
	ALBARAKA BANK LTD	96
	ARIVA RENTALS (PTY) LTD	99
	BANK OF CHINA LTD	101
	BANK OF TAIWAN	105
	BARKO FINANCIAL SERVICES (PTY) LTD	109
	BAYPORT FINANCIAL SERVICES 2010 (PTY) LTD	111
	BETTERLIFE GROUP LTD	115
	BIDVEST BANK LTD	117
	BMW FINANCIAL SERVICES (SOUTH AFRICA) (PTY) LTD	121
	BNP PARIBAS PERSONAL FINANCE SOUTH AFRICA LTD	122
	BNP PARIBAS SA	125
	BRITISH AIRWAYS PLC	131
	C T INTERNATIONAL FINANCIERS (PTY) LTD	135
	CANARA BANK	137
	CAPITAL HARVEST (PTY) LTD	139
	CAPITEC BANK LTD	141
	CHINA CONSTRUCTION BANK CORPORATION	144
	CITIBANK N.A.	147
	CLICKS GROUP LTD	151
	COMAIR LTD	155
	DEUTSCHE BANK AG	160
	DEVELOPMENT BANK OF SOUTHERN AFRICA	180
	DINERS CLUB (S A) (PTY) LTD	184
	DIS-CHEM PHARMACIES LTD	186
	DISCOVERY LTD	196
	DISCOVERY VITALITY (PTY) LTD	200
	DITSOBOTLA PRIMARY SAVINGS & CREDIT CO-OPERATIVE BANK LTD PRIMARY CO-OPERATIVE	202
	EXCLUSIVE BOOKS GROUP (PTY) LTD	204
	FFS FINANCE SOUTH AFRICA (RF) (PTY) LTD	208
	FINBOND GROUP LTD	210
	FIRSTRAND BANK LTD	214
	FOSCHINI GROUP LTD (THE)	219
	FUNDI CAPITAL (PTY) LTD	224
	GAUTENG ENTERPRISE PROPELLER	226
	GBS MUTUAL BANK	229
	GRINDROD BANK LTD	231
	GROBANK LTD	234
	HABIB OVERSEAS BANK LTD	236
	HBZ BANK LTD	238
	HSBC BANK PLC	241
	ICICI BANK LTD	244
	IEMAS FINANCIAL SERVICES CO-OPERATIVE LIMITED PRIMARY CO-OPERATIVE	248
	INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD	251
	INVESTEC BANK LTD	262
	ITHALA DEVELOPMENT FINANCE CORPORATION LTD	267
	JPMORGAN CHASE BANK N.A.	270
	LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA	273
	LEWIS GROUP LTD	277
	MAHALA LOYALTY PROGRAM (PTY) LTD	280
	MER PASTCOMP LTD	282
	MERCEDES-BENZ FINANCIAL SERVICES SOUTH AFRICA (PTY) LTD	285
	MTN GROUP LTD	287
	NATIONAL YOUTH DEVELOPMENT AGENCY (THE)	291
	NBC HOLDINGS (PTY) LTD	294
	NEDBANK LTD	297
	OLD MUTUAL FINANCE (RF) (PTY) LTD	306
	OOBA (PTY) LTD	308
	ORANJEKAS SPAAR EN KREDIET KOOPERATIEF BEPERK PRIMARY CO-OPERATIVE	312
	OSK KOOPERATIEWE BANK BEPERK PRIMARY CO-OPERATIVE	314
	PHAKAMANI FOUNDATION	316
	PICK N PAY STORES LTD	318
	PRIMEDIA (PTY) LTD	322
	RETAILABILITY (PTY) LTD	326
	SA HOME LOANS (PTY) LTD	329
	SA TAXI DEVELOPMENT FINANCE (PTY) LTD	332
	SASFIN BANK LTD	334
	SAVEACT TRUST	337
	SMALL ENTERPRISE FINANCE AGENCY LTD	339
	SMALL ENTERPRISE FOUNDATION (THE)	343
	SOCIETE GENERALE SA	346
	SOUTH AFRICAN AIRWAYS (SOC) LTD	352
	SOUTH AFRICAN RESERVE BANK	356
	SPOT MONEY SA (PTY) LTD	360
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	362
	STANDARD CHARTERED PLC	367
	STATE BANK OF INDIA	370
	SUID-AFRIKAANSE POSKANTOOR (SOC) LTD	375
	THUTHUKANI FINANCIAL SERVICES HOLDINGS (PTY) LTD	378
	TOYOTA FINANCIAL SERVICES (SOUTH AFRICA) LTD	380
	TRANSACTION CAPITAL LTD	383
	TYME BANK LTD	386
	UBANK LTD	388
	VIRTUAL MARKET PLACE (RF) (PTY) LTD	391
	VODACOM GROUP LTD	393
	WELLNESS WAREHOUSE (PTY) LTD	397
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	400
	ZIPHAKAMISE SAVINGS AND CREDIT CO-OPERATIVE BANK LIMITED PRIMARY CO-OPERATIVE	403

Report Coverage

The focus of this report is the South African banking industry and includes information on other credit granting, lease financing, vehicle financing, and loyalty and reward programmes. It includes comprehensive information on the state and size of the sector including the central bank, commercial banks and new banks, regulatory developments and corporate actions. There are profiles of 92 companies. These include the major commercial banks as well as institutions such as the former South African Bank of Athens, now trading as Grobank after the acquisition by GroCapital and African Bank, which has been under Reserve Bank control after it was nearly liquidated in 2014. Profiles also include companies offering financial services such as Woolworths, Vodacom and MTN.

Introduction

The focus of this report is the South African banking industry and includes information on other credit granting, lease financing, vehicle financing, and loyalty and reward programmes. According to the South African Reserve Bank (Sarb) total assets of all types of registered banks stood at R5.74-trillion in May 2019, which was a year-on-year increase of 11.1%. South Africa’s banking sector is still highly concentrated with the five largest banks holding over 90% of total assets as at February 2019. As Capitec Bank’s customer base has grown to the largest in the industry, the bank’s market share on the Johannesburg Stock Exchange (JSE) continues to grow and it now holds the third largest share after FirstRand and Standard Bank. Further changes in the landscape are brought about by three technology-based banks that are entering the sector. Commercial banks are facing increasing competition from financial technology (fintech) companies that are taking over the traditional activities (like payments, lending, deposits, asset management, and even advisory services) of established players. Analysts emphasised the increasingly important role that microfinance institutions are playing in the improvement of financial inclusion.

Strengths

• Digital banks will have lower operational costs.
• Growth in the African operations of the largest South African commercial banks.
• Microfinancing is helping to increase financial inclusion.
• Strictly enforced regulatory framework.
• Strong, healthy competition in the sector and new entrants keeps industry players innovating which further strengthens it.
• The banked population of 80% is higher than in the rest of sub-Saharan Africa.
• The major South African banks have well-diversified portfolios, geographically and in terms of products.
• The South African banking system is well capitalised, safely above the capital adequacy ratio.
• Well-managed banking system with effective governance structures and management systems.

Weaknesses

• Capital requirements that determine how banks allocate credit tend to work against small businesses and poor people.
• Job losses as a result of branch closures by the major banks.
• Loyalty and reward programmes are now being used more selectively.
• Operating expenses of large commercial banks are increasing due to staff costs and implementation of information technology platforms.
• Strict enforcement of regulations turns potential clients towards the informal microlending sector.
• The sector is dominated by the major commercial banks.
• Weak financial performance of commercial banks as a result of fewer loans to consumers whose spending power is weakened by increases in living costs.

Opportunities

• Expansion of the major banks into the growing African private banking market.
• Low-income earners who remain outside the formal banking system and who will be attracted by innovative inclusive banking products.
• The expected growth of Islamic banking locally and continentally.

Threats

• An increase in bank robberies and cash in transit heists.
• Increasing cybercrime activities.
• Legislation for land expropriation without compensation is unclear about the handling of mortgages for expropriated land or properties.
• New legislation that will cause debt of poor South Africans to be written off.
• Slow growth of the South African economy.
• The deterioration of sovereign credit ratings constrains the funding and liquidity of banks.

Outlook

Low levels of economic growth could impact on financial stability through higher unemployment and the reduced ability to service debt by households and companies. This, in turn, could lower the profitability of banks and impact negatively on the quality of banks’ assets. Digital banks that enter the sector will need to offer better service, cheaper lending rates, and higher savings interest rates than traditional banks in order to gain a competitive advantage. Erwin van Helden, head of payments and digital channels for Temenos Middle East and Africa told Moneyweb: “In the long term, the size of the South African banking market will stay the same in the sense that most consumers are already banked. But we are likely to see the market share being redistributed as these new players enter the market.”

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		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1.	Industry Value Chain	9
2.2.	Geographic Position	9
3.	SIZE OF THE INDUSTRY	10
3.1.	Central Banking	10
3.2.	Commercial Banking	10
3.3.	Other Credit Granting	14
3.4.	Lease Financing	16
4.	STATE OF THE INDUSTRY	17
4.1.	Local	17
4.1.1.	Corporate Actions	26
4.1.2.	Regulations	29
4.1.3.	Enterprise Development and Social Economic Development	35
4.2.	Continental	37
4.3.	International	42
5.	INFLUENCING FACTORS	44
5.1.	Economic Environment	44
5.2.	Government Intervention	45
5.3.	Financial Inclusion	46
5.4.	Operating Expenses	48
5.5.	Labour	49
5.6.	Cryptocurrency	51
5.7.	Information Technology (IT), Research and Development (R&D) and Innovation	52
5.8.	Crime and Fraud	55
5.9.	Environmental and Social Concerns	56
6.	COMPETITION	58
6.1.	Barriers to Entry	59
7.	SWOT ANALYSIS	59
8.	OUTLOOK	60
9.	INDUSTRY ASSOCIATIONS	61
10.	REFERENCES	62
10.1.	Publications	62
10.2.	Websites	64
	APPENDIX 1	67
	Registered CFI’s as at February 2018	67
	APPENDIX 2	69
	Summary of Major Players in all Subsectors of the Banking Industry	69
	COMPANY PROFILES	86
	ABSA BANK LTD	86
	AFRICAN BANK LTD	91
	AFRICAN DAWN CAPITAL LTD	94
	ALBARAKA BANK LTD	97
	ARIVA RENTALS (PTY) LTD	100
	BANK OF CHINA LTD	102
	BANK OF TAIWAN	106
	BARKO FINANCIAL SERVICES (PTY) LTD	110
	BAYPORT FINANCIAL SERVICES 2010 (PTY) LTD	112
	BETTERLIFE GROUP LTD	116
	BIDVEST BANK LTD	118
	BMW FINANCIAL SERVICES (SOUTH AFRICA) (PTY) LTD	122
	BNP PARIBAS PERSONAL FINANCE SOUTH AFRICA LTD	124
	BNP PARIBAS SA	126
	BRITISH AIRWAYS PLC	132
	C T INTERNATIONAL FINANCIERS (PTY) LTD	137
	CANARA BANK	139
	CAPITAL HARVEST (PTY) LTD	141
	CAPITEC BANK LTD	143
	CHINA CONSTRUCTION BANK CORPORATION	146
	CITIBANK N.A.	150
	CLICKS GROUP LTD	153
	COMAIR LTD	157
	DEUTSCHE BANK AG	162
	DEVELOPMENT BANK OF SOUTHERN AFRICA	183
	DINERS CLUB (S A) (PTY) LTD	186
	DIS-CHEM PHARMACIES LTD	188
	DISCOVERY LTD	198
	DISCOVERY VITALITY (PTY) LTD	202
	DITSOBOTLA PRIMARY SAVINGS AND CREDIT CO-OPERATIVE BANK LTD	205
	EDCON LTD	207
	EXCLUSIVE BOOKS GROUP (PTY) LTD	211
	FFS FINANCE SOUTH AFRICA (RF) (PTY) LTD	214
	FINBOND GROUP LTD	216
	FIRSTRAND BANK LTD	220
	FOSCHINI GROUP LTD (THE)	225
	FUNDI CAPITAL (PTY) LTD	230
	GAUTENG ENTERPRISE PROPELLER	233
	GBS MUTUAL BANK	236
	GRINDROD BANK LTD	238
	HABIB OVERSEAS BANK LTD	241
	HBZ BANK LTD	243
	GROBANK LTD	246
	HSBC BANK PLC	249
	ICICI BANK LTD	252
	IEMAS FINANCIAL SERVICES CO-OPERATIVE LTD	255
	INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD	259
	INVESTEC BANK LTD	270
	ITHALA DEVELOPMENT FINANCE CORPORATION LTD	275
	JPMORGAN CHASE BANK N.A.	278
	KUYASA HOUSING FINANCE COMPANY (PTY) LTD (THE)	281
	LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA	283
	LEWIS GROUP LTD	287
	MAHALA LOYALTY PROGRAM (PTY) LTD	291
	MERCANTILE BANK LTD	293
	MERCEDES-BENZ FINANCIAL SERVICES SOUTH AFRICA (PTY) LTD	295
	MTN GROUP LTD	297
	NATIONAL YOUTH DEVELOPMENT AGENCY (THE)	301
	NBC HOLDINGS (PTY) LTD	304
	NEDBANK LTD	307
	OLD MUTUAL FINANCE (RF) (PTY) LTD	316
	OOBA (PTY) LTD	318
	ORANJEKAS SPAAR EN KREDIET KOOPERATIEF BEPERK	321
	OSK KOOPERATIEWE BANK BEPERK	323
	PHAKAMANI FOUNDATION	325
	PICK N PAY STORES LTD	327
	PRIMEDIA (PTY) LTD	332
	REAL PEOPLE HOME FINANCE (PTY) LTD	336
	SA HOME LOANS (PTY) LTD	338
	SA TAXI DEVELOPMENT FINANCE (PTY) LTD	341
	SASFIN BANK LTD	343
	SAVEACT TRUST	346
	SMALL ENTERPRISE FINANCE AGENCY LTD	348
	SMALL ENTERPRISE FOUNDATION (THE)	352
	SOCIETE GENERALE SA	355
	SOUTH AFRICAN AIRWAYS (SOC) LTD	361
	SOUTH AFRICAN RESERVE BANK	365
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	369
	STANDARD CHARTERED PLC	374
	STATE BANK OF INDIA	377
	SUID-AFRIKAANSE POSKANTOOR (SOC) LTD	382
	THUTHUKANI FINANCIAL SERVICES HOLDINGS (PTY) LTD	385
	TOYOTA FINANCIAL SERVICES (SOUTH AFRICA) LTD	387
	TRANSACTION CAPITAL LTD	390
	TYME BANK LTD	393
	UBANK LTD	395
	VIRGIN MONEY SOUTH AFRICA (PTY) LTD	398
	VIRTUAL MARKET PLACE (PTY) LTD	400
	VODACOM GROUP LTD	402
	WELLNESS WAREHOUSE (PTY) LTD	406
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	409
	ZIPHAKAMISE SAVINGS AND CREDIT CO-OPERATIVE BANK LTD	412

Report Coverage

As well as focusing on developments in the commercial banking sector, the detailed Banking Industry report includes information on Other Credit Granting, Lease Financing, and Loyalty and Reward Programmes. The report includes details on 90 organisations, fintech, digital banking, cryptocurrencies and other new technologies influencing the sector, as well as recent corporate actions and developments such as the demise of VBS Bank and the Competition Commission’s ongoing investigation into 17 banks relating to price fixing and market allocation in the trading of foreign currency. It includes details on the restructuring of overseas shareholdings in local commercial banks, resulting in the reorganisation of the Old Mutual Group and sell-down by Barclays of its stake in Barclays Africa with implications for two of the big banks, Nedbank and Absa.

Introduction

The focus of this report is the South African banking industry including other credit granting, lease financing, and loyalty and reward programmes. According to the South African Reserve Bank (SARB) commercial banks are the biggest single contributor to the output of the finance and insurance subsector in South Africa. The latest research showed that the finance, insurance, real estate and business services sector contributed 19.8% to total real GDP in 2015. 10.3% came from the real estate and business services subsector and 9.5% from the finance and insurance subsector. Of the 9.5%, commercial banks contributed about 4% and insurance around 2%. Total assets of registered banks reached R5,140bn in January 2018, an increase of 5.1% over R4,890bn in January 2017. South Africa’s banking sector is still highly concentrated with the five largest banks holding 91% of total assets as of 31 December 2017. The landscape is changing with technology-based banks entering the sector and increasing competition from financial technology (fintech) companies.

Strengths

• Strictly enforced regulatory framework.
• Strong, healthy competition in the sector and new entrants keeps industry players innovating which further strengths it.
• The asset-based risk-averse nature of Islamic banking protects this sector from economic uncertainties.
• The major South African banks have well-diversified portfolios, geographically and in terms of products.
• The South African banking system is well capitalised, safely above the capital adequacy ratio.
• Well-managed banking system with effective governance structures and management systems.

Weaknesses

• Capital requirements that determine how banks allocate credit tend to work against small businesses and poor people.
• Despite compliance with BEE legislation, the ownership structures of the sector are still largely non-transformed.
• Lease financing is not seen as a viable option with consumers instead opting for instalment sales.
• Strict enforcement of regulations turns potential clients towards the informal micro-lending sector.
• The sector is heavily dominated by the ‘Big Four’ banks.

Opportunities

• Focus on the growing African private banking market.
• Increased investment opportunities as a result of the expected recovery of the US and UK economies, European quantitative easing and lower international oil prices.
• Low-income earners who remain outside the formal banking system and who will be attracted by innovative Inclusive Banking products.
• The expected growth of Islamic banking locally and continentally.
• The growth of the banking industry through new and innovative technology and new entrants which will make POS payments and other banking initiatives more accessible.
• The popularity, success and continued growth of loyalty reward programmes.

Threats

• Increasing cybercrime activities.
• Increasing political interference.
• Lack of IT skills in the banking sector.
• Reputational and financial damage as a result of banks colluding on exchange rates.
• Slow growth of the South African economy, growing inflation.
• Slower economic growth of African countries is impacting the performance of South African banks with holdings in African banks.
• The banking system being placed on a negative economic outlook by credit rating agencies.
• The possibility of South Africa’s credit rating being downgraded even further.

Outlook

Industry role players said credit losses could still worsen and the retail credit cycle has been worse than expected, partly due to more borrowers opting for debt review instead of defaulting on their loans. Ernest van Rooyen, a financial services Africa partner at EY, said the competitive landscape in the banking sector would likely intensify this year from technology-led new entrants such as Bank Zero, Discovery Bank and TymeDigital. Cash-strapped customers would benefit from increasing efforts by existing and new banks as they put new products on the market to gain customers. Although banking sector analysts expect the big four South African banks to be able to handle economic and regulatory factors adequately and maintain a sound capital adequacy ratio based on their earnings resilience and capital buffers, the downgrade of South Africa’s and the banks’ foreign currency debt to non-investment grade will negatively affect the ability of the banks to “service foreign currency obligations”, according to the Deputy Reserve Bank Governor.

The Banking Industry in South Africa 2018

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The Banking Industry in South Africa 2016-03-31

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		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1.	Industry Value Chain	7
2.2.	Geographic Position	9
3.	SIZE OF THE INDUSTRY	9
3.1.	Central Banking	11
3.2.	Commercial Banking	12
3.3.	Other Credit Granting	15
3.4.	Lease Financing	18
4.	STATE OF THE INDUSTRY	19
4.1.	Local	19
4.1.1.	Corporate Actions	28
4.1.2.	Regulations	30
4.1.3.	Enterprise Development and Social Economic Development	37
4.2.	Continental	40
4.3.	International	42
5.	INFLUENCING FACTORS	44
5.1.	Economic Environment	44
5.2.	Government Intervention	46
5.3.	Political Environment	47
5.4.	Land Restitution	48
5.5.	Operating Expenses	49
5.6.	Expansion into Africa	49
5.7.	Labour	50
5.8.	Cryptocurrency	54
5.9.	Information Technology (IT), Research and Development (R&D) and Innovation	54
5.10.	Crime	58
5.11.	Financial Inclusion	59
5.12.	Environmental Concerns	62
6.	COMPETITION	62
6.1.	Barriers to Entry	64
7.	SWOT ANALYSIS	65
8.	OUTLOOK	66
9.	INDUSTRY ASSOCIATIONS	66
10.	REFERENCES	68
10.1.	Publications	68
10.2.	Websites	70
	APPENDIX 1	73
	Registered CFI’s as at October 2017	73
	APPENDIX 2	76
	Summary of Major Players in all Subsectors of the Banking Industry	76
	COMPANY PROFILES – CENTRAL BANKING & BANKS AND OTHER BANKING SERVICES	90
	ABSA BANK LTD	90
	AFRICAN BANK LTD	95
	BANK OF CHINA LTD	97
	BANK OF TAIWAN	101
	BIDVEST BANK LTD	104
	BNP PARIBAS SA	107
	CANARA BANK	113
	CAPITEC BANK LTD	115
	CHINA CONSTRUCTION BANK CORPORATION	118
	CITIBANK N.A.	122
	DEUTSCHE BANK AG	125
	DITSOBOTLA PRIMARY SAVINGS AND CREDIT CO-OPERATIVE BANK LTD	145
	FIRSTRAND BANK LTD	147
	GBS MUTUAL BANK	152
	GRINDROD BANK LTD	155
	HSBC BANK PLC	158
	ICICI BANK LTD	161
	INVESTEC BANK LTD	165
	JPMORGAN CHASE BANK N.A.	170
	LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA	173
	MERCANTILE BANK LTD	178
	NEDBANK LTD	181
	OSK KOOPERATIEWE BANK LTD	190
	SASFIN BANK LTD	192
	SOCIETE GENERALE SA	195
	SOUTH AFRICAN BANK OF ATHENS LTD (THE)	200
	SOUTH AFRICAN RESERVE BANK	205
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	209
	STANDARD CHARTERED PLC	213
	STATE BANK OF INDIA	216
	SUID-AFRIKAANSE POSKANTOOR (SOC) LTD	221
	UBANK LTD	224
	VBS MUTUAL BANK	227
	VIRGIN MONEY SOUTH AFRICA (PTY) LTD	229
	COMPANY PROFILES – ISLAMIC FINANCE SOUTH AFRICA	231
	ABSA BANK LTD	231
	ALBARAKA BANK LTD	236
	FIRSTRAND BANK LTD	240
	HABIB OVERSEAS BANK LTD	245
	HBZ BANK LTD	247
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	250
	COMPANY PROFILES – AUTOMOTIVE FINANCING	254
	ABSA BANK LTD	254
	ARIVA RENTALS (PTY) LTD	259
	BIDVEST BANK LTD	261
	BMW FINANCIAL SERVICES (SOUTH AFRICA) (PTY) LTD	264
	FFS FINANCE SOUTH AFRICA (RF) (PTY) LTD	266
	FIRSTRAND BANK LTD	268
	IEMAS FINANCIAL SERVICES CO-OPERATIVE LTD	273
	MERCEDES-BENZ FINANCIAL SERVICES SOUTH AFRICA (PTY) LTD	277
	NEDBANK LTD	279
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	288
	TOYOTA FINANCIAL SERVICES (SOUTH AFRICA) LTD	292
	COMPANY PROFILES – RETAIL & SECTION 21 COMPANIES	295
	AFRICAN DAWN CAPITAL LTD	295
	BARKO FINANCIAL SERVICES (PTY) LTD	298
	BAYPORT FINANCIAL SERVICES 2010 (PTY) LTD	300
	BETTERLIFE GROUP LTD	305
	BNP PARIBAS PERSONAL FINANCE SOUTH AFRICA LTD	307
	C T INTERNATIONAL FINANCIERS (PTY) LTD	310
	CAPITAL HARVEST (PTY) LTD	312
	DISCOVERY LTD	314
	FINBOND GROUP LTD	319
	FOSCHINI GROUP LTD (THE)	324
	FUNDI CAPITAL (PTY) LTD	328
	GAUTENG ENTERPRISE PROPELLER	331
	IEMAS FINANCIAL SERVICES CO-OPERATIVE LTD	334
	INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD	338
	ITHALA DEVELOPMENT FINANCE CORPORATION LTD	349
	KUYASA HOUSING FINANCE COMPANY (PTY) LTD (THE)	352
	LEWIS GROUP LTD	354
	NATIONAL YOUTH DEVELOPMENT AGENCY (THE)	357
	OLD MUTUAL FINANCE (RF) (PTY) LTD	360
	ORANJEKAS SPAAR EN KREDIET KOOPERATIEF LTD	362
	PHAKAMANI FOUNDATION	364
	REAL PEOPLE HOME FINANCE (PTY) LTD	366
	SA TAXI DEVELOPMENT FINANCE (PTY) LTD	368
	SMALL ENTERPRISE FINANCE AGENCY LTD	370
	SMALL ENTERPRISE FOUNDATION (THE)	374
	THUTHUKANI FINANCIAL SERVICES HOLDINGS (PTY) LTD	376
	TRANSACTION CAPITAL LTD	378
	UBANK LTD	381
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	384
	COMPANY PROFILES – REWARD & LOYALTY PROGRAMMES	387
	ABSA BANK LTD	387
	BRITISH AIRWAYS PLC	392
	CLICKS GROUP LTD	397
	COMAIR LTD	401
	DINERS CLUB (S A) (PTY) LTD	406
	DIS-CHEM PHARMACIES LTD	408
	DISCOVERY VITALITY (PTY) LTD	417
	EDCON LTD	420
	EXCLUSIVE BOOKS GROUP (PTY) LTD	424
	FIRSTRAND BANK LTD	428
	FOSCHINI GROUP LTD (THE)	433
	INVESTEC BANK LTD	437
	MAHALA LOYALTY PROGRAM (PTY) LTD	442
	MTN GROUP LTD	444
	NEDBANK LTD	448
	PICK N PAY STORES LTD	457
	PRIMEDIA (PTY) LTD	462
	SOUTH AFRICAN AIRWAYS (SOC) LTD	467
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	471
	VIRGIN MONEY SOUTH AFRICA (PTY) LTD	475
	VIRTUAL MARKET PLACE (PTY) LTD	477
	VODACOM GROUP LTD	479
	WELLNESS WAREHOUSE (PTY) LTD	483
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	486
	COMPANY PROFILES – DIRECT HOME LOANS	489
	ABSA BANK LTD	489
	FIRSTRAND BANK LTD	494
	INVESTEC BANK LTD	499
	NBC HOLDINGS (PTY) LTD	504
	NEDBANK LTD	507
	OOBA (PTY) LTD	516
	SA HOME LOANS (PTY) LTD	519
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	522

Report Coverage

As well as focusing on developments in the commercial banking sector, the detailed Banking Industry report includes information on Other Credit Granting, Lease Financing, and Loyalty and Reward Programmes. Profiles for 91 companies active in the sector are provided. Included is VBS Mutual Bank, originally known as the Venda Building Society, which gave President Jacob Zuma a loan in 2016 to finance the R7.8m he was forced to pay back by the Constitutional Court for non-security upgrades to his home in Nkandla. Since this time VBS has clinched a deal to be the official banker of the Twelve Apostle Church in Christ (TACC), which claims to have 6.8 million members. Also profiled is Capitec, which as at December 2016 had the second-largest market share in the unsecured credit market book and showed the biggest growth in customer numbers year-on-year with an increase of 1 million customers.

Introduction

The focus of this report is the South African banking industry including other credit granting, lease financing, and loyalty and reward programmes. South Africa’s financial sector is well developed and the finance, real estate and business services industry was the biggest contributor to GDP in 2016 at 19.6%. Total banking sector assets amounted to R4,890bn in January 2017 compared to R4,860bn in January 2016, representing a significantly smaller growth from 2015 when total assets stood at R4,286bn. The South African banking sector is under the spotlight for collusion by three of the major banks on fixing foreign currency. Other developments include the closing of the accounts of the Gupta family, regarded as politically connected to President Jacob Zuma, which led to the scrutiny of black ownership in the financial sector and the major banks defending their lending practices and records in addressing racial inequality. The firing of Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas on 30 March 2017 has resulted in the country’s foreign currency debt and seven financial institutions being downgraded to non-investment grade (BB+), also termed junk status.

Strengths

• Strictly enforced regulatory framework.
• Strong, healthy competition in the sector keeps industry players innovating which further strengths it.
• The asset-based risk-averse nature of Islamic banking protects this sector from economic uncertainties.
• The major South African banks have well-diversified portfolios, geographically and in terms of products.
• The South African banking system is well capitalised, safely above the capital adequacy ratio.
• Well-managed banking system with effective governance structures and management systems.

Weaknesses

Opportunities

• Focus on the growing African private banking market.
• Increased investment opportunities as a result of the expected recovery of the US and UK economies, European quantitative easing and lower international oil prices.
• Low-income earners who remain outside the formal banking system and who will be attracted by innovative Inclusive Banking products.
• The expected growth of Islamic banking locally and continentally.
• The growth of the banking industry through new and innovative technology which will make POS payments and other banking initiatives more accessible.
• The popularity, success and continued growth of loyalty reward programmes.

Threats

• If Eskom does not sign on IPPs, this will have a negative impact on investments made by banks in renewable energy projects.
• Illiquidity of African countries is impacting the performance of South African banks with holdings in African banks.
• Increasing cybercrime and terrorist activities.
• Increasing political interference.
• Lack of IT skills in the banking sector.
• Lower growth expected from China and other emerging market economies (EMEs).
• Reputational and financial damage as a result of banks colluding on exchange rates.
• Slow growth of the South African economy, growing inflation and increasing unemployment.
• The banking system being placed on a negative economic outlook by credit rating agencies.
• The possibility of South Africa’s credit rating being downgraded even further.

Outlook

Banks globally and locally will be dealing with estimated global growth of 2.7% in 2017 and increasing costs driven by new regulatory requirements. The significant investments that many banks have to make in their IT infrastructure, data management and analytics capabilities are likely to have a negative impact on the banks’ bottom line, but banks that manage to turn these costs into savings are expected to enjoy a competitive advantage. According to estimates from KPMG, more than 80% of banks’ technology budgets in the UK for the past five years have been spent on addressing regulatory requirements, mitigating litigation and streamlining.Although banking sector analysts expect the “Big Four” South African banks to be able to handle economic and regulatory factors adequately and maintain a sound capital adequacy ratio based on their earnings resilience and capital buffers, the recent downgrade of the country’s foreign currency debt and the banks was described as concerning. According to the Deputy Reserve Bank Governor, the downgrade to non-investment grade (BB+) will negatively affect the ability of the banks to “service foreign currency obligations.” However, Nedbank CEO Mike Brown emphasised that despite the downgrade and the associated challenges, local banks operate “in a South African banking system that is sound and well-capitalised.”

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		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1.	Industry Value Chain	6
2.2.	Geographic Position	8
3.	SIZE OF THE INDUSTRY	8
3.1.	Central Banking	9
3.2.	Banking	10
3.3.	Lease Financing	14
4.	STATE OF THE INDUSTRY	33
4.1.	Local	33
4.1.1.	Corporate Actions	40
4.1.2.	Regulations	42
4.1.3.	Enterprise Development and Social Economic Development	49
4.2.	Continental	52
4.3.	International	55
5.	INFLUENCING FACTORS	57
5.1.	Government Intervention	57
5.2.	Political Environment	58
5.3.	Economic Environment	59
5.4.	Expansion into Africa	60
5.5.	Labour	60
5.6.	Technology, Research and Development (R&D) and Innovation	63
5.7.	Crime	67
5.8.	Financial Inclusion	68
5.9.	Environmental Concerns	70
6.	COMPETITION	71
6.1.	Barriers to Entry	74
7.	SWOT ANALYSIS	75
8.	OUTLOOK	76
9.	INDUSTRY ASSOCIATIONS	76
10.	REFERENCES	78
10.1.	Publications	78
10.2.	Websites	80
	APPENDIX 1	83
	Markets in which Loyalty and Reward Programmes have been adopted	83
	COMPANY PROFILES – CENTRAL BANKING & BANKS AND OTHER BANKING SERVICES	84
	AFRICAN BANK LTD	84
	BANK OF BARODA	86
	BANK OF CHINA LTD	88
	BANK OF TAIWAN	91
	BIDVEST BANK LTD	95
	CANARA BANK	98
	CAPITEC BANK LTD	100
	CHINA CONSTRUCTION BANK CORPORATION	103
	CITIBANK NA	107
	DEVELOPMENT BANK OF SOUTHERN AFRICA	110
	DITSOBOTLA PRIMARY SAVINGS AND CREDIT CO-OPERATIVE BANK LTD	114
	FIRSTRAND BANK LTD	116
	GBS MUTUAL BANK	121
	GRINDROD BANK LTD	124
	HSBC BANK PLC	127
	ICICI BANK LTD	130
	INVESTEC BANK LTD	134
	JPMORGAN CHASE BANK NA	139
	MERCANTILE BANK LTD	142
	NEDBANK LTD	145
	OSK KOOPERATIEWE BANK LTD	153
	SOUTH AFRICAN BANK OF ATHENS LTD (THE)	155
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	159
	STANDARD CHARTERED BANK PLC	163
	STATE BANK OF INDIA	166
	SUID-AFRIKAANSE POSKANTOOR (SOC) LTD	171
	UBANK LTD	174
	VBS MUTUAL BANK	177
	VIRGIN MONEY SOUTH AFRICA (PTY) LTD	180
	COMPANY PROFILES – ISLAMIC FINANCE SOUTH AFRICA	182
	ALBARAKA BANK LTD	182
	FIRSTRAND BANK LTD	186
	HABIB OVERSEAS BANK LTD	191
	HBZ BANK LTD	193
	COMPANY PROFILES – AUTOMOTIVE FINANCING	196
	ARIVA RENTALS (PTY) LTD	196
	BIDVEST BANK LTD	198
	BMW FINANCIAL SERVICES (SOUTH AFRICA) (PTY) LTD	201
	FFS FINANCE SOUTH AFRICA (RF) (PTY) LTD	203
	FIRSTRAND BANK LTD	205
	MERCEDES-BENZ FINANCIAL SERVICES SOUTH AFRICA (PTY) LTD	210
	NEDBANK LTD	212
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	220
	TOYOTA FINANCIAL SERVICES (SOUTH AFRICA) LTD	224
	COMPANY PROFILES – RETAIL & SECTION 21 COMPANIES	227
	BNP PARIBAS PERSONAL FINANCE SOUTH AFRICA LTD	227
	FOSCHINI RETAIL GROUP (PTY) LTD	229
	GAUTENG ENTERPRISE PROPELLER	232
	KUYASA FUND (THE)	235
	PHAKAMANI FOUNDATION	237
	SMALL ENTERPRISE FINANCE AGENCY LTD	239
	SMALL ENTERPRISE FOUNDATION (THE)	243
	THUTHUKANI FINANCIAL SERVICES HOLDINGS (PTY) LTD	245
	UBANK LTD	248
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	251
	COMPANY PROFILES – PRIVATE AND PRIVATELY HELD CONCERNS	254
	BARKO FINANCIAL SERVICES (PTY) LTD	254
	BAYPORT FINANCIAL SERVICES 2010 (PTY) LTD	256
	BETTERLIFE HOME LOANS (PTY) LTD	261
	C T INTERNATIONAL FINANCIERS (PTY) LTD	263
	CAPITAL HARVEST (PTY) LTD	265
	FUNDI CAPITAL (PTY) LTD	267
	IEMAS FINANCIAL SERVICES CO-OPERATIVE LTD	271
	NATIONAL YOUTH DEVELOPMENT AGENCY (THE)	275
	OLD MUTUAL FINANCE (RF) (PTY) LTD	278
	SA TAXI DEVELOPMENT FINANCE (PTY) LTD	280
	TEMBEKA SOCIAL INVESTMENT COMPANY LTD	282
	COMPANY PROFILES – REWARD & LOYALTY PROGRAMMES	284
	BRITISH AIRWAYS PLC	284
	DINERS CLUB (S A) (PTY) LTD	289
	EDCON LTD	291
	EXCLUSIVE BOOKS GROUP (PTY) LTD	295
	FIRSTRAND BANK LTD	299
	FOSCHINI RETAIL GROUP (PTY) LTD	304
	INVESTEC BANK LTD	307
	MTN GROUP LTD	312
	NEDBANK LTD	316
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	324
	VIRGIN MONEY SOUTH AFRICA (PTY) LTD	328
	VODACOM GROUP LTD	330
	WELLNESS WAREHOUSE (PTY) LTD	334
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	337
	FIRSTRAND BANK LTD	340
	INVESTEC BANK LTD	345
	NBC HOLDINGS (PTY) LTD	350
	NEDBANK LTD	353
	SA HOME LOANS (PTY) LTD	361
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	364

Report Coverage

The detailed report on the competitive banking sector describes the current market, the latest regulatory and corporate developments and discusses factors influencing the success of the sector. The report profiles 95 companies, including the “Big Four” banks, FirstRand, Standard Bank, Barclays Africa (Absa) and Nedbank, as well as major players in all sub-sectors of the Banking Industry.

Introduction

The focus of this report is the South African banking industry including other credit granting, lease financing, and loyalty and reward programmes. The banking sector is vital to a country’s economy because it distributes resources and capital across all economic sectors, which in turn allows these sectors to contribute to the performance of the economy. South Africa’s financial sector is well developed and the finance, real estate and business services industry was the biggest contributor to GDP in 2015 at 18.6%, followed by government at 15.5%. Total banking sector assets amounted to R4,855bn in January 2016 compared to R4,286bn in January 2015. The South African banking sector compares favourably with its international counterparts and has shown resilience against poor local economic fundamentals, erratic European markets, the crash of African Bank in 2014 and recent ratings agency downgrades.

Strengths

Weaknesses

• A large portion of the population does not know about Islamic banking.
• Despite compliance with BEE legislation, the ownership structures of the sector are still largely non-transformed.
• Lease financing is not seen as a viable option with consumers instead opting for instalment sales.
• Strict enforcement of regulations turns potential clients towards the informal micro-lending sector.
• The sector is heavily dominated by the ‘Big Four’ banks.

Opportunities

• Expansion of mobile banking in Africa where mobile broadband connections are anticipated to reach 160 million in 2016.
• Focus on the growing African private banking market.
• Increased investment opportunities as a result of the expected recovery of the US and UK economies, European quantitative easing and lower international oil prices.
• Low-income earners who remain outside the formal banking system and who will be attracted by innovative Inclusive Banking products.
• The expected growth of Islamic banking locally and continentally.
• The growth of the banking industry through new and innovative technology which will make POS payments and other banking initiatives more accessible.
• The popularity, success and continued growth of loyalty reward programmes.

Threats

• Increased downward pressure on consumer spending as a result of increasing inflation rates and interest rates.
• Increasing cybercrime and terrorist activities.
• Increasing unemployment.
• Lack of IT skills in the banking sector.
• Lower growth expected from China and other emerging market economies (EMEs).
• Possible curatorship of UBank following an NCR investigation into non-adherence to regulations.
• Slow growth of the South African economy, exacerbated by the implementation of load-shedding for the foreseeable future.
• The banking system being placed on a negative economic outlook by credit rating agencies.
• The possibility of South Africa’s credit rating being downgraded to junk status.

Outlook

Banks globally and locally will be dealing estimated global growth of 3.4% in 2016 and increasing costs driven by new regulatory requirements. At the same time, banks could use regulatory and supervisory imperatives to drive cost savings and to accelerate the adoption of new business models. On the other hand, the significant investments that many banks have to make in their IT infrastructure, data management and analytics capabilities could be regulatory costs that might have a negative impact on the bottom line of banks. Banks that manage to turn these costs into savings will have a competitive advantage.The South African banking sector will have to deal with internal issues of self-regulation, new rules of Basel III and severe economic challenges that will impact consumers. Banking sector analysts expect the “Big Four” South African banks to be able to handle these factors adequately and maintain a sound capital adequacy ratio, based on their earnings resilience and capital buffers. However, players in the sector may find it harder to source funding inexpensively as ratings agencies downgraded the South African banking industry in 2014 and placed it on negative outlook for 2015. In order to achieve growth, commentators believe the top South African banks will need to look to African countries to grow margins significantly in 2016. However, there is still predicted room for growth as new technologies and easily accessible information open up banking possibilities to the poor and unbanked. Analysts concur that the South African banking industry needs to improve its defences and protection against cybercriminal attacks and believe that Islamic banking will continue to grow in the short-term, as investors seek safer and low risk assets. Credit granting is expected to remain steady in line with weak economic growth and unsecured lending is predicted to continue its upward trend as banks continue to decrease their exposure to bad debt, in line with new regulations. The market for lease financing is expected to remain steady as there has not been significant deviation over the past five years. As far as loyalty reward membership programmes are concerned, Value+Nettwork estimates that memberships will continue to grow as more consumers become aware of the benefits offered by these programmes.

The Banking Industry in South Africa 2016

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		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1.	Industry Value Chain	10
2.2.	Geographic Position	12
3.	SIZE OF THE INDUSTRY	12
3.1.	Central Banking	12
3.2.	Banking	14
3.3.	Lease Financing	17
4.	STATE OF THE INDUSTRY	38
4.1.	Local	38
4.1.1.	Corporate Actions	47
4.1.2.	Regulations	49
4.1.3.	Enterprise Development and Social Economic Development	54
4.2.	Continental	56
4.3.	International	62
5.	INFLUENCING FACTORS	64
5.1.	Government Intervention	64
5.2.	Economic Environment	64
5.3.	Expansion into Africa	66
5.4.	Labour	67
5.5.	Technology, Research and Development (R&D) and Innovation	70
5.6.	Crime	74
5.7.	Financial Inclusion	77
5.8.	Environmental Concerns	78
6.	COMPETITION	79
6.1.	Barriers to Entry	82
7.	SWOT ANALYSIS	83
8.	OUTLOOK	84
9.	INDUSTRY ASSOCIATIONS	85
10.	REFERENCES	87
10.1.	Publications	87
10.2.	Websites	89
	Appendix 1	92
	Responsibilities of the South African Reserve Bank	92
	Appendix 2	93
	Islamic Banking Instruments	93
	COMPANY PROFILES – CENTRAL BANKING & BANKS AND OTHER BANKING SERVICES	94
	ABSA BANK LTD	94
	African Bank Ltd	99
	Bank of Baroda	102
	Bank of China Ltd	104
	Bank of Taiwan	107
	Bidvest Bank Ltd	110
	BNP Paribas	113
	Canara Bank	118
	Capitec Bank Ltd	120
	China Construction Bank Corporation	123
	Citibank NA	126
	Deutsche Bank AG	129
	Development Bank of Southern Africa	164
	Ditsobotla Primary Savings and Credit Co-Operative Bank Ltd	168
	FirstRand Bank Ltd	170
	GBS Mutual Bank	175
	Grindrod Bank Ltd	178
	HSBC Bank Plc	182
	ICICI Bank Ltd	184
	Investec Bank Ltd	188
	JPMorgan Chase Bank NA	193
	Land and Agricultural Development Bank of South Africa	195
	Mercantile Bank Ltd	200
	Nedbank Ltd	203
	OSK Kooperatiewe Bank Ltd	211
	Sasfin Bank Ltd	213
	Societe Generale SA	216
	South African Bank of Athens Ltd (The)	220
	South African Reserve Bank	225
	Standard Bank of South Africa Ltd (The)	230
	Standard Chartered Bank Plc	234
	State Bank of India	236
	Suid-Afrikaanse Poskantoor (SOC) Ltd	240
	Ubank Ltd	244
	VBS Mutual Bank	247
	Virgin Money South Africa (Pty) Ltd	250
	COMPANY PROFILES – ISLAMIC FINANCE SOUTH AFRICA	252
	Absa Bank Ltd	252
	Albaraka Bank Ltd	257
	FirstRand Bank Ltd	261
	Habib Overseas Bank Ltd	266
	HBZ Bank Ltd	268
	COMPANY PROFILES – AUTOMOTIVE FINANCING	271
	Absa Bank Ltd	271
	Ariva Rentals (Pty) Ltd	276
	Bidvest Bank Ltd	278
	BMW Financial Services (South Africa) (Pty) Ltd	281
	FFS Finance South Africa (RF) (Pty) Ltd	282
	FirstRand Bank Ltd	284
	Mercedes-Benz Financial Services South Africa (Pty) Ltd	289
	Nedbank Ltd	291
	Standard Bank of South Africa Ltd (The)	299
	Toyota Financial Services (South Africa) Ltd	303
	COMPANY PROFILES – RETAIL & SECTION 21 COMPANIES	306
	Foschini Retail Group (Pty) Ltd	306
	Gauteng Enterprise Propeller	309
	JD Group Ltd	312
	Kuyasa Fund (The)	318
	Lewis Group Ltd	320
	Phakamani Foundation	323
	RCS Investment Holdings Ltd	325
	Small Enterprise Finance Agency Ltd	327
	Small Enterprise Foundation (The)	331
	Thuthukani Financial Services (Pty) Ltd	333
	Ubank Ltd	335
	Woolworths Financial Services (Pty) Ltd	338
	COMPANY PROFILES – PRIVATE AND PRIVATELY HELD CONCERNS	341
	African Dawn Capital Ltd	341
	Barko Financial Services (Pty) Ltd	345
	Bayport Financial Services 2010 (Pty) Ltd	347
	BetterLife Home Loans (Pty) Ltd	349
	Capital Harvest (Pty) Ltd	351
	CT International Financiers (Pty) Ltd	353
	Discovery Ltd	354
	Edu-Loan (Pty) Ltd	359
	Finbond Group Ltd	363
	Iemas Financial Services Co-Operative Ltd	368
	Industrial Development Corporation of South Africa Ltd	372
	Ithala Development Finance Corporation Ltd	379
	Ithala SOC Ltd	384
	National Youth Development Agency (The)	386
	Net1 Finance Holdings (Pty) Ltd	388
	Old Mutual Finance (RF) (Pty) Ltd	390
	Real People (Pty) Ltd	392
	SA Taxi Development Finance (Pty) Ltd	394
	Tembeka Social Investment Company Ltd	395
	Transaction Capital Ltd	397
	COMPANY PROFILES – REWARD & LOYALTY PROGRAMMES	400
	Absa Bank Ltd	400
	American Express International	405
	British Airways Plc	407
	Clicks Group Ltd	412
	Comair Ltd	417
	Diners Club (SA) (Pty) Ltd	422
	Dis-Chem Pharmacies (Pty) Ltd	424
	Discovery Vitality (Pty) Ltd	430
	Edcon Ltd	433
	Exclusive Books Group (Pty) Ltd	437
	FirstRand Bank Ltd	441
	Foschini Retail Group (Pty) Ltd	446
	Investec Bank Ltd	449
	Mahala Loyalty Program (Pty) Ltd	454
	MTN Group Ltd	457
	Nedbank Ltd	462
	Ooba (Pty) Ltd	470
	Pick n Pay Stores Ltd	473
	Primedia (Pty) Ltd	478
	South African Airways (SOC) Ltd	483
	Standard Bank of South Africa Ltd (The)	487
	Virgin Money South Africa (Pty) Ltd	491
	Virtual Market Place (Pty) Ltd	493
	Vodacom Group Ltd	495
	Wellness Warehouse (Pty) Ltd	499
	Woolworths Financial Services (Pty) Ltd	501
	COMPANY PROFILES – DIRECT HOME LOANS	504
	Absa Bank Ltd	504
	FirstRand Bank Ltd	509
	Investec Bank Ltd	514
	NBC Holdings (Pty) Ltd	519
	Nedbank Ltd	522
	Ooba (Pty) Ltd	530
	SA Home Loans (Pty) Ltd	533
	Standard Bank of South Africa Ltd (The)	535

Introduction

The banking sector is vital to a country’s economy because it distributes resources and capital across all economic sectors, which in turn allows these sectors to contribute to the performance of the economy. South Africa’s financial sector is well developed, contributes an estimated 10.5% to GDP, and according to The African Economic Outlook report on South Africa for 2014, holds assets valued at over R6-trillion. Reserve Bank statistics indicate total assets of R4.189-trillion for the local banking sector, which posted a profit of R51.1bn for 2014. The South African banking sector compares favourably with its international counterparts and has showed resilience against poor local economic fundamentals, erratic European markets, the crash of African Bank and recent ratings agency downgrades. Despite these problems, the local banking industry is still regarded by the International Monetary Fund (IMF) as one of the best banking systems globally. Although this report focuses mainly on the South African banking industry, the Islamic banking sector, other credit granting, lease financing, and loyalty and reward programmes are also covered. Islamic banking, despite its growth, continues to hold a marginal stake in the global banking sector; the same goes for its stake of the market share in the South African context currently standing at less than 2%. Other services within the sector have grown in varying degrees. Credit granting has shown small and steady growth but the National Credit Regulator (NCR) has increased oversight of unsecured lending, including a recent announcement declaring the intention to investigate the activities of mining banker Ubank.

Strengths

• Strictly enforced regulatory framework.
• Strong, healthy competition in the sector keeps industry players innovating which further strengths it.
• The asset-based risk-averse nature of Islamic banking protects this sector from economic uncertainties.
• The major South African banks have well-diversified portfolios, geographically and in terms of products.
• The South African banking system is well capitalised, safely above the capital adequacy ratio
• Well-managed banking system with effective governance structures and management systems.

Weaknesses

• A large portion of the population does not know about Islamic banking.
• Despite compliance with BEE legislation, the ownership structures of the sector are still largely non-transformed.
• Lease financing not seen as a viable option with consumers instead opting for instalment sales.
• Strict enforcement of regulations turns potential clients towards the informal micro-lending sector.
• The sector is heavily dominated by the ‘Big Four’ banks.

Opportunities

• Expansion of mobile banking in Africa where mobile broadband connections are anticipated to reach 160 million in 2016.
• Focus on the growing African private banking market.
• Increased consumer spending as a result of expected lower inflation rates.
• Increased investment opportunities as a result of the expected recovery of the US and UK economies, European quantitative easing and lower international oil prices.
• Low-income earners who remain outside the formal banking system and who will be attracted by innovative Inclusive Banking products.
• The expected growth of Islamic banking locally and continentally.
• The growth of the banking industry through new and innovative technology which will make POS payments and other banking initiatives more accessible.
• The popularity, success, and continued growth of loyalty reward programmes

Threats

• Cyber-crime and terrorist activities.
• Global economic destabilisation because of geo-political terrorist activities and economic problems in the Eurozone and Japan.
• Increasing unemployment.
• Lack of IT skills in the banking sector.
• Lower growth expected from China and other emerging market economies (EMEs).
• Possible curatorship of Ubank following an NCR investigation into non-adherence to regulations.
• Ratings downgrades by various ratings agencies as well as the banking system being placed on a negative economic outlook.
• Slow growth of the South African economy, exacerbated by the implementation of load-shedding for the foreseeable future.

Outlook

BNP Paribas has cited the problems with electricity supply, an expected difficult round of labour negotiations, and predicted political instability and tensions in parliament being problematic for growth in South Africa in 2015. The organisation used these factors to justify its below-consensus 2% growth rate for the country, although it did increase its forecast for economic growth for 2016 to 2.6%. The organisation also expected better conditions for consumers because of lower international oil prices, which would lead to greater consumer purchasing power and an easier inflation outlook. The Monetary Policy Committee of the Reserve Bank has released its forecast for inflation for 2015, an expected average of 3.8%, which is a significant improvement on 2014’s average inflation of 6.1%. The Committee also stated that the steep decline expected in 2015 would provide a strong base effect for inflation in 2016. BNP expects the rand to remain weak for 2015, holding around the R11.50 to the US dollar level. The global economic growth outlook remains mixed, despite improvements in the US economy, decreased international oil prices, and more rounds of quantitative easing announced for struggling European countries. The US economy grew the fastest it has grown since 2003, at a rate of 5% in 2014. Growth in the United Kingdom has been steady, despite slightly slower fourth quarter growth. However, the international economy poses various pitfalls going forward as other advanced economies have declined, including Japan which is in a technical recession and the Eurozone staying weak because of fears of deflation. The IMF has also lowered the growth prediction for top emerging market economies which has led to an overall global growth decrease of 0.3% to 3.5%. Chinese growth is expected to moderate down to 6.8% from achieved growth of 7.4% in 2014, as the economy continues to rebalance towards domestic consumption and reduce vulnerabilities in its banking system. Africa will remain a high growth region in 2015, although weaker commodity prices will increase risk in investing in Africa. The South African banking sector will have to deal with internal issues of self-regulation, the NCR’s investigation of Ubank and the continued curatorship of African Bank in 2015. Banking sector analysts expect the top five South African banks to be able to handle these factors adequately and maintain a sound capital adequacy ratio. However, players in the sector may find it harder to source funding inexpensively as ratings agencies downgraded the South African banking industry in 2014 and placed it on negative outlook for 2015. Banks will also have to deal with threats from the political sphere as politicians will look to score points through calls for financial sector nationalisation and the establishment of a state-owned bank. In order to grow significantly, commentators believe the top South African banks will need to look to African countries to grow margins significantly in 2015 and 2016, as the South African banking market matures. However, there is still predicted room for growth as new technologies and easily accessible information open up banking possibilities to the poor and underprivileged. The South African banking industry needs to improve its defences and protection against cyber-criminal attacks as the “Big Four” were fined in 2014 for not having the proper protections in place. Analysts concur that Islamic banking will continue to grow in the short-term, as investors seek safer and low risk assets. Credit granting is expected to remain steady in line with weak economic growth and unsecured lending is predicted to continue its downtrend as it faces further regulations from the NCR. The market for lease financing is expected to remain steady as there has not been significant deviation over the past five years. As far as loyalty reward membership programmes are concerned, Value Network estimates that memberships will continue to grow as more consumers become aware of the benefits offered by these programmes.

The Banking Industry in South Africa 2015

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Industry Landscape

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Historical Reports

The Banking Industry in South Africa 2024-04-18

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The Banking Industry in South Africa 2022-09-26

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The Banking Industry in South Africa 2021-03-16

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The Banking Industry in South Africa 2019-09-06

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The Banking Industry in South Africa 2018-08-03

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The Banking Industry in South Africa 2017-04-06

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The Banking Industry in South Africa 2016-03-31

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		PAGE
1.	INTRODUCTION	1
2.	DESCRIPTION OF THE INDUSTRY	1
2.1.	Industry Supply Chain	5
2.2.	Geographic Position	6
3.	SIZE OF THE INDUSTRY	7
3.1.	Central Banking	7
3.2.	Banking	7
3.3.	Other Credit Granting	9
3.4.	Lease Financing	10
4.	STATE OF THE INDUSTRY	17
4.1.	Local	17
4.1.1.	Corporate Actions	24
4.1.2.	Regulations	25
4.1.3.	Enterprise Development and Social Economic Development	27
4.2.	Continental	28
4.3.	International	31
5.	INFLUENCING FACTORS	32
5.1.	Regulatory Reform	32
5.2.	Government Interest	32
5.3.	Economic Environment	32
5.4.	Global Geopolitical Environment	34
5.5.	Expansion into Africa	34
5.6.	Labour	34
5.6.1.	Skills and Training	34
5.6.2.	Employment Figures	36
5.6.3.	Unions	36
5.7.	Technology and Information Technology	36
5.8.	Crime	37
5.9.	Financial Inclusion	38
5.10.	Environmental Concerns	39
6.	COMPETITION	40
6.1.	Barriers to Entry	41
6.2.	Research and Development (R&D) and Innovation	41
7.	SWOT ANALYSIS	42
8.	OUTLOOK	43
9.	INDUSTRY ASSOCIATIONS	44
10.	REFERENCES	45
10.1.	Publications	45
10.2.	Websites	46
	ORGANOGRAM 81110, 81121a & 81920a	47
	Central Banking & Banks and Other Banking Services	47
	COMPANY PROFILES	49
	ABSA BANK LTD	49
	AFRICAN BANK LTD	54
	BIDVEST BANK LTD	57
	CAPITEC BANK LTD	60
	CITIBANK NA	62
	FIRSTRAND BANK LTD	64
	GBS MUTUAL BANK	67
	GRINDROD BANK LTD	69
	HABIB OVERSEAS BANK LTD	72
	INVESTEC BANK LTD	74
	LAND & AGRICULTURAL DEVELOPMENT BANK OF SA	78
	MERCANTILE BANK LTD	81
	NEDBANK LTD	83
	SASFIN BANK LTD	89
	SOUTH AFRICAN BANK OF ATHENS LTD (THE)	91
	SOUTH AFRICAN POST OFFICE (SOC) LTD	94
	SOUTH AFRICAN RESERVE BANK	97
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	100
	UBANK LTD	103
	VBS MUTUAL BANK	105
	VIRGIN MONEY SOUTH AFRICA (PTY) LTD	107
	ORGANOGRAM 81121b	109
	Islamic Finance in South Africa	109
	COMPANY PROFILES	110
	ABSA BANK LTD	110
	ALBARAKA BANK LTD	115
	FIRSTRAND BANK LTD	118
	HBZ BANK LTD	121
	ORGANOGRAM 81910a	123
	Automotive Finance	123
	COMPANY PROFILES	124
	ABSA BANK LTD	124
	ARIVA RENTALS (PTY) LTD	129
	FFS FINANCE SOUTH AFRICA (PTY) LTD	130
	FIRSTRAND BANK LTD	131
	MERCEDES-BENZ FINANCIAL SERVICES (PTY) LTD	134
	NEDBANK LTD	136
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	142
	TOYOTA FINANCIAL SERVICES (SA) LTD	145
	ORGANOGRAM 81920b	147
	Retail & Section 21 Companies	147
	COMPANY PROFILES	148
	GAUTENG ENTERPRISE PROPELLER	148
	JD GROUP LTD	151
	LEWIS GROUP LTD	157
	RCS INVESTMENT HOLDINGS (PTY) LTD	159
	SMALL ENTERPRISE FINANCE AGENCY (SOC) LTD	161
	SMALL ENTERPRISE FOUNDATION (THE)	164
	THUTHUKANI FINANCIAL SERVICES (PTY) LTD	166
	UBANK LTD	168
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	170
	ORGANOGRAM 81920c	172
	Privately and Publicly Held Concerns	172
	COMPANY PROFILES	173
	AFRICAN DAWN CAPITAL LTD	173
	BARKO FINANCIAL SERVICES (PTY) LTD	176
	BAYPORT FINANCIAL SERVICES 2010 (PTY) LTD	178
	CT INTERNATIONAL FINANCIERS LTD	180
	EDU-LOAN (PTY) LTD	181
	FINBOND GROUP LTD	184
	IEMAS FINANCIAL SERVICES (CO-OPERATIVE) LTD	187
	INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD	189
	NATIONAL YOUTH DEVELOPMENT AGENCY	194
	NET1 FINANCE HOLDINGS (PTY) LTD	196
	PA BETTERBOND (PTY) LTD	198
	REAL PEOPLE (PTY) LTD	200
	TRANSACTION CAPITAL LTD	202
	ORGANOGRAM 81920d	205
	Reward & Loyalty Programmes	205
	COMPANY PROFILES	207
	ABSA BANK LTD	207
	AMERICAN EXPRESS INTERNATIONAL	212
	BRITISH AIRWAYS PLC	213
	CLICKS GROUP LTD	217
	COMAIR LTD	221
	DINERS CLUB (SA) (PTY) LTD	224
	DIS-CHEM PHARMACIES (PTY) LTD	226
	DISCOVERY VITALITY (PTY) LTD	230
	EDCON LTD	232
	EXCLUSIVE BOOKS GROUP (PTY) LTD	235
	FIRSTRAND BANK LTD	238
	FOSCHINI RETAIL GROUP (PTY) LTD	241
	INVESTEC BANK LTD	244
	MAHALA LOYALTY PROGRAMME (PTY) LTD	248
	NEDBANK LTD	253
	NEWBUCKS OPERATIONS (PTY) LTD	259
	OOBA (PTY) LTD	261
	PICK \'N PAY STORES LTD	263
	PRIMEDIA (PTY) LTD	267
	PROTEA GROUP HOLDINGS SOUTH AFRICA (PTY) LTD	271
	SOUTH AFRICAN AIRWAYS (SOC) LTD	274
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	278
	VIRGIN MONEY SOUTH AFRICA (PTY) LTD	281
	VIRTUAL MARKET PLACE (PTY) LTD	283
	VODACOM GROUP LTD	284
	WELLNESS WAREHOUSE (PTY) LTD	287
	WOOLWORTHS FINANCIAL SERVICES (PTY) LTD	289
	ORGANOGRAM 81920e	291
	Direct Home Loans	291
	COMPANY PROFILES	292
	ABSA BANK LTD	292
	FIRSTRAND BANK LTD	297
	INVESTEC BANK LTD	300
	NBC HOLDINGS (PTY) LTD	304
	NEDBANK LTD	306
	OOBA (PTY) LTD	312
	SA HOME LOANS (PTY) LTD	314
	STANDARD BANK OF SOUTH AFRICA LTD (THE)	315

Banking Industry South Africa

The Banking Industry in South Africa 2024

The Banking Industry in South Africa 2022

The Banking Industry in South Africa 2021

The Banking Industry in South Africa 2019

The Banking Industry in South Africa 2018

The Banking Industry in South Africa 2017

The Banking Industry in South Africa 2016

The Banking Industry in South Africa 2015

Report Info

Report Coverage

Introduction

Trends

Opportunities

Challenges

Outlook

Full Report Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. Full Industry reports also profile all major players operating in the industry.

Industry Landscape Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. The Overview reports do not include profiles of major players.

Historical Reports

The Banking Industry in South Africa 2022-09-26

The Banking Industry in South Africa 2021-03-16

The Banking Industry in South Africa 2019-09-06

The Banking Industry in South Africa 2018-08-03

The Banking Industry in South Africa 2017-04-06

The Banking Industry in South Africa 2016-03-31

The Banking Industry in South Africa 2015-02-03

Table of Contents

Report Coverage

Introduction

Strengths

Weaknesses

Opportunities

Threats

Outlook

Full Report Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. Full Industry reports also profile all major players operating in the industry.

Industry Landscape Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. The Overview reports do not include profiles of major players.

Historical Reports

The Banking Industry in South Africa 2024-04-18

The Banking Industry in South Africa 2021-03-16

The Banking Industry in South Africa 2019-09-06

The Banking Industry in South Africa 2018-08-03

The Banking Industry in South Africa 2017-04-06

The Banking Industry in South Africa 2016-03-31

The Banking Industry in South Africa 2015-02-03

Table of Contents

Report Coverage

Introduction

Strengths

Weaknesses

Opportunities

Threats

Outlook

Full Report Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. Full Industry reports also profile all major players operating in the industry.

Industry Landscape Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. The Overview reports do not include profiles of major players.

Historical Reports

The Banking Industry in South Africa 2024-04-18

The Banking Industry in South Africa 2022-09-26

The Banking Industry in South Africa 2019-09-06

The Banking Industry in South Africa 2018-08-03

The Banking Industry in South Africa 2017-04-06

The Banking Industry in South Africa 2016-03-31

The Banking Industry in South Africa 2015-02-03

Table of Contents

Report Coverage

Introduction

Strengths

Weaknesses

Opportunities

Threats

Outlook

Full Report Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. Full Industry reports also profile all major players operating in the industry.

Industry Landscape Country or Region-specific industry reports on 400 + key industries across the African continent identifying supply chain, influencing factors, SWOT and other key industry drivers. The Overview reports do not include profiles of major players.

Historical Reports

The Banking Industry in South Africa 2024-04-18

The Banking Industry in South Africa 2022-09-26

The Banking Industry in South Africa 2021-03-16

The Banking Industry in South Africa 2018-08-03

The Banking Industry in South Africa 2017-04-06

The Banking Industry in South Africa 2016-03-31

The Banking Industry in South Africa 2015-02-03

Full Report

Industry Landscape

Full Report

Industry Landscape

Full Report

Industry Landscape

Full Report

Industry Landscape

Full Report

Industry Landscape

Full Report

Industry Landscape

Full Report

Industry Landscape

Full Report

Industry Landscape