KwaZulu-Natal Business 2016-17 edition

OVERVIEW
across the Big Four totalled R73.8-
billion for the year, according to a
survey done by PWC (Major Banks
Analysis).
Some of the figures published
reflect the strain that consumers
are feeling: credit impairments
went up by 10.8% and nonperforming
loans also grew.
Competition is stiff in developing
new strategies to incorporate
the emerging second economy
and the largely rural 'unbanked'
communities. These new banking
means and methods are developing
the sector and giving it new
flexibility, diversity and range.
alBaraka Bank has its headquarters
at Kingsmead in Durban,
which is also the site of its corporate-banking
division. HBZ Bank,
a wholly owned subsidiary of
Habib Bank and AG Zurich, operates
an Islamic branch in Westville
and has branches in Durban and
Pietermaritzburg.
In the sector catering to highnet-worth
individuals, Nedbank
has adopted a new strategy by
combining BoE Private Clients
(South African clients) and
Fairbairn Private Bank (international
clients). All of these clients
are now be served by Nedbank
Private Wealth.
Absa's British investor, Barclays,
has indicated it is aiming to sell its
stake in African operations and financial
services group Old Mutual
(54% stakeholder in Nedbank)
and has announced its plan to
create four stand-alone businesses
out of the Old Mutual Group.
This would allow the UK-based
wealth management business
and the New York-based asset
managers to be free of linkages
to the rand, while the South African businesses (Nedbank and Old
Mutual Emerging Markets) would be free to focus on their specialities.
Project funding
Merchant banking and investment banking are the most competitive
sectors within banking. In KwaZulu-Natal, banks have been vital
in getting really big infrastructure projects under way, a trend that is
set to continue for some time to come, with provincial and national
government committed to a comprehensive infrastructure upgrade.
The European Investment Bank has extended a €50m long-term
loan through Rand Merchant Bank to fund the massive water systems
upgrade being undertaken by the eThekwini Municipality. The investment
programme encompasses two new aqueducts and the replacement
of 1 600km of old asbestos water mains.
RMB was also involved in several Tongaat-Hulett and Richards Bay
Coal Terminal projects, two major players in the provincial economy.
Nedbank Capital supported Seacom’s R240-million undersea-cable
project, and has signed a three-year funding agreement with healthcare
group Netcare to the value of R1-billion.
Absa’s public-sector division holds the provincial government banking
account.
The KZN Growth Fund is a project-finance facility supported
by the KwaZulu-Natal Provincial Government, Standard Bank, the
Development Bank of Southern Africa and the Infrastructure
Corporation. The fund is capitalised to the extent of R5-billion.
New customers, new technology
Despite the incredible strides that have been made in providing banking
services to the previously unbanked, there is still a long way to
go. MasterCard, for example, has pointed out that only 2% of retail
transactions on the continent of Africa are conducted electronically.
The consulting firm McKinsey puts the figure for Africa's population
not connected to formal banking at close to 80%: this presents an opportunity
for South African banks in Africa. South Africa has the highest
connection rate in Africa.
Finscope's 2014 survey of South African banking and financial surveys
shows that between 2004 and 2014 a remarkable eight-million people
were connected to the financial system in some way. Overall, the
'financially included' reached 31.4-million (up from 17.7-million in 2004).
In a category called 'formally served' which includes services other than
formal banks with branch networks, the percentage of South Africans so
served grew from 50% to 80%; in the 'banked' category (more traditional
but including new devices), the percentage grew from 46% to 75%.
91 KWAZULU-NATAL BUSINESS 2016/17