BA900 – Oct 21. FirstRand showing signs of life again
- Annual growth rates in the SARB’s gross loans and advances category decelerated from 3.7% in September to 2.5% in October, declining in value in October. The decline emanated from Corporate lending which continues to lag considerably behind Retail. Retail annual loan growth rose from 5.9% to 6.1% with Corporate declining from 0.6% to -1.9%, remaining volatile. On our methodology, industry advances growth was 2% YoY, 1.8% YTD and -0.4% MoM. Annual SARB loan growth has dropped back below deposit growth (+2.9%), with loans/deposits ratio reaching new lows.
- Corporate overdrafts remains the strongest growing category (+22.4% YoY), in contrast to Corporate loans (-1.5%) which is the weakest and the more dominant corporate book. Residential mortgages (+7.7% YoY), instalment sales (+6% YoY) and credit cards (+4.3% YoY) all improved on September. Personal loans is the Retail category under the most pressure with the book marginally lower YoY.
- FirstRand is clawing back some growth and market share; its book was declining 3.6% YoY in June. However, its 0.8% YoY advances growth lags considerably behind Standard Bank (+4.7%) and Absa (+6.5%). Its loan growth is driven primarily by Corporate lending, in contrast to its large peers. It is regaining some lost market share in mortgages, instalment sales and credit cards but not in personal loans.
- Absa was the only major bank to grow its book in October, resulting in YoY growth rising from 5.5% in September to 6.5%. Standard Bank YoY growth has declined from 7.8% in September to 4.7%. Nedbank remains with negative growth of 0.9% YoY. Standard Bank is dominating Retail market share gains over the past 12 months. Nedbank is losing market share in all categories apart from personal loans and foreign currency loans. Investec’s market share of total advances has remained flat YoY.
- Capitec continues to gain market share (now 27%) in personal loans with 5.7% YoY growth vs the industry at -0.5%. It’s also growing its credit card market share, off a low base of 4.8%. It remains dominant in deposit growth (+27% YoY) with a 10.6% market share. African Bank’s credit card and personal loan books are shrinking YoY with strong deposit growth off a very low base.
- Of the majors, FirstRand dominates YoY deposit growth (+5.3%) but lost ground to its peers in October. Absa and Standard Bank follow with 4.7% and 2.2% growth respectively, while Nedbank has negative growth. Retail deposit growth is well ahead of wholesale growth.
- Standard Bank has 29% growth in its provisions YoY, compared to FirstRand (-7.8%) and Absa (-2.1%). Nedbank’s provisions are rising despite a declining book. Industry impaired advances as a % of loans declined from 4.9% in September to 4.7%.
- Discovery Bank is still growing its deposit market share, but it remains lower than African Bank by comparison. Off a low base its advances grew 11% YoY. Its credit card book is modestly bigger than African Bank at R3.9bn.
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