After Barclays’ withdrawal, the South African bank Absa Bank is struggling to come up with a commercial project in a tense competitive and economic context.
Released from the control of its historical shareholder, Barclays (a British multinational investment bank and financial services company headquartered in London), and anticipating the imminent arrival of its new CEO, Absa Bank is, in theory, in a strong position to come up with a new strategy.
But the South African banking group continues to follow the direction announced in early 2018.
This is despite the permanent transformation of the sector in the country, between the arrival of new online banks on the one hand, and branch closures and job losses caused by the economic crisis on the other.
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Absa Bank ranks fifth in top 200
Widely considered the least flexible of the major South African banks and the least attractive to investors, Absa Bank sometimes struggled to adapt to market fluctuations. This year, the bank ranked fifth in the top 200, behind its main rivals, Standard Bank and FirstRand.
The results for the six months ended June 2019, which show a growth of only 3% in profits and dividends, tend to support that impression.
But the bank explains that, on the contrary, Barclays’ exit served as a catalyst for its “reset”, allowing Absa Bank to finally “pursue a coherent growth strategy for a financial services provider in Africa.”
Absa’s South African bank is an essential part of its project
“We have reduced management levels to bring managers and employees closer to front-line.”
The strategy presented in March 2018 put its South African retail bank, described as “essential”, at the heart of its growth project.
Absa has simplified its business model and organization by integrating its wealth management, insurance, distribution, and trust activities “in order to create a single point of sale combining all banking and non-banking services.”
The latest results indicate that this decision is bearing fruit. Real estate loans increased by 16% in the first half of 2019, in comparison, the market as a whole increased only by 7%.
Retail deposits increased by 12%, compared to a 9% increase in the market.
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First published in jeuneafrique, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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