BA900 – Nov 21.  Absa in a class of its own

  • Annual growth rates in the SARB’s gross loans and advances category accelerated from 2.5% in October to 5.2% in November, rising an impressive 2.5% MoM. The rise emanated mainly from Corporate lending (+3.3%). Retail MoM growth was 0.8%, resulting in annual loan growth of 5.5% vs Corporate at 2.2%. On our methodology, industry advances growth is 3.8% YoY, 3.9% YTD and 2% MoM. YoY growth rates are gradually rising but real growth rates in credit are at low levels compared to historic averages.
  • Corporate overdrafts remain the strongest growing category (+21.4% YoY) despite a 4% drop MoM. Corporate loans had a strong month with 4.9% growth, thereby reversing a declining YoY growth trend (+2.3% vs -1.5% in October). Residential mortgages (+7.7% YoY), instalment sales (+5.9% YoY) and credit cards (+4% YoY) all improved on October, maintaining annual growth trends. Personal loans showed modest growth of 0.3% in November but not enough to achieve annual growth (-0.3% YoY).
  • Absa is pulling away from its peers after another strong month of loan growth (+3.5% MoM). Its YoY growth of 8.4% is far ahead of its peers that are all below 3.5%. Standard Bank’s momentum has slowed considerably with two negative months of growth in a row. FirstRand is clawing back some growth with accelerating YoY growth after being negative mid-year. Nedbank had a strong November with 1.7% growth, but its YoY growth remains muted at 0.4%.
  • Standard Bank continues to dominate Retail market share gains over the past 12 months, while its loses share in Corporate. Almost the opposite is true for FirstRand apart from credit cards where its gaining market share. Nedbank is losing market share in all categories apart from personal loans and foreign currency loans. Absa dominates market share gains apart from unsecured lending where it is taking a more cautious approach. Investec’s market share of total advances has remained flat YoY.
  • Capitec continues to gain market share (now 27%) in personal loans with 7.1% YoY growth vs the industry at -0.3%. It’s YoY 9.8% credit card growth is well ahead of the industry at 4%. Its deposit growth continues to dominate – up 28.8% YoY vs the industry at 5.7%.  African Bank’s credit card and personal loan books are shrinking YoY.
  • MoM loan growth exceeded deposit growth. Of the majors, Absa replaces FirstRand with the highest YoY deposit growth (+9.9%). Nedbank is struggling to attract funds with negative growth (-0.9%), well off the industry growth rate of 5.7%.
  • With SARB data indicating declining NPL’s, its reflected in declines in all the major banks provisions in November. Standard Bank has bolstered its provisions the most YoY whilst declines have been seen from Absa and FirstRand.
  • Discovery Bank is growing its market share in deposits and credit cards, with 33% growth in deposits YoY.