BA900 – Dec 21. Absa dominates 2021 with the best advances and deposit growth. FirstRand has a strong 2H21. Nedbank lagging in most categories.
- Annual growth rates in the SARB’s gross loans and advances category declined from 5.2% in Nov 21 to 4.4% in Dec 21. On our methodology, industry advances growth is 4.1% YoY, with 0.2% MoM. Corporate overdrafts (+16.9%), residential mortgages (+7.3%) and Instalment Sales (+5.9%) achieved the best growth in 2021 whilst foreign currency loans (-6.8%), personal loans (+0.5%) and commercial mortgages (+2.7%) lagged. Retail grew 5.9% vs Corporate at 2.3%.
- Of the major banks, Absa significantly outperformed with 8.4% growth, followed by Standard Bank at 3.9%, FirstRand at 3.7% and Nedbank at 2.8%. Investec finished the year with 4.4% advances growth.
- Growth was heavily skewed towards the second half of 2021. At Jun 21, advances were broadly in line with Dec 20. FirstRand’s advances were lower at Jun 21 than Dec 20, returning 10% annualised growth in 2H21. Absa achieved an impressive 16.2% annualised growth over this six-month period (Standard Bank 3% and Nedbank 8.4%). This momentum is positive heading into 2022.
- Absa’s performance resulted in it gaining market share in 5 of the 8 lending categories we review, losing in credit cards, personal loans and corporate loans. Nedbank lost market share in 6 categories, FirstRand in 5 and Standard Bank only 3, two being in the corporate space.
- Of the majors, Absa also performed the best on the liability side of the balance sheet with 9.6% deposit growth, followed by FirstRand (+6.1%), Standard Bank (+2.9%) and Nedbank at 1.4%. Industry growth was 5.9%, outpacing advances growth. The loan to deposit ratio is at a new historic low of 88%, highlighting the impact COVID-19 and the sluggish economy are having on credit growth.
- Capitec had another stellar performance in deposit gathering, up 25.9% in 2021. Its personal loans book grew 9% increasing its market share from 25.3% to 27.3%. Its credit card book was up 9.8%. African Bank on the other hand saw a 2.6% and 1.7% decline in its credit card and personal loan books.
- Despite its robust loan growth, Absa’s provisions surprisingly declined by 7.6%. This is in stark contrast to Standard Bank that saw provisions rise by 2% with 3.9% advances growth. FirstRand also saw a sharp 7.4% decline in its provisions. Overall credit quality has improved with NPL’s declining from a peak of 5.2% in Jan 21 to 4.5% in Dec 21.
- Discovery Bank is growing its market share in deposits and credit cards, after achieving above sector growth of 30% and 8% respectively. Its advances growth of 5% is somewhat disappointing given the low base from which it is growing (R3.8bn).
- Tyme Bank achieved deposit growth of 75%, totalling R2.8bn in Dec 21. Its advances growth is 24%, reaching R308m. Its personal loans book has shrunk 70% to R1.2m.
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