BA900 – Jan 21. FirstRand maintains positive momentum. Deposit growth slips.

  • On our methodology, industry advances growth is 4.3% YoY, with 0.3% MoM. All categories had positive MoM growth apart from commercial mortgages (-0.7%) and foreign currency loans (-4.1%). Corporate overdrafts had the best month and remains the strongest growth category YoY (+18.5%). Credit card and personal loans both had robust MoM growth (1.5% and 1.3%), post the holiday spending. Consequently, retail achieved 0.6% MoM growth compared to -0.1% in Corporate. Retail YoY growth is 6.3% vs Corporate at 2.3%.
  • Of the major banks, FirstRand was the only bank achieving positive MoM growth in January, with 1.5%. Absa, the star performer of 2021, saw the book shrink 0.2% with Standard Bank and Nedbank down 0.3% and 0.2% respectively. Absa still leads with 7% YoY growth, but FirstRand is gaining momentum with 5.5%. Six months ago, FirstRand had the lowest YoY growth of the four banks at -2%. Standard Bank follows with 4.9% YoY growth and Nedbank at 3.1%. Investec’s lending fell 1.3% MoM resulting in 0.3% YoY growth.
  • Absa is clawing back lost market share in credit cards with the best MoM growth rate of 1.7%. However, its making little progress in recovering lost personal loan market share. FirstRand is no longer losing market share in mortgages over the past 6-months. It is, however, still losing market share in instalment sales to Standard Bank over the period. Standard Bank has lost momentum in its corporate lending with market share declines in corporate overdrafts and loans over the past 6-months. Apart from personal loans Nedbank continues to lose market share in the major lending categories YoY.
  • Industry deposits declined MoM, as a total (-1.3%) and at a retail (-1.3%) level. Surprisingly, this does not appear to be a seasonal event based on the last 10 years of history. All major banks saw declines apart from Standard Bank (+0.3%). Nedbank’s deposits shrank a material 3.6% MoM, followed by Absa at -2.7% and FirstRand -1.5%. Retail deposits declined at all the banks.
  • Capitec’s deposits also shrank (-1.8%) resulting in 12.5% YoY growth. Its personal loans book grew 1.6% MoM, gaining further market share. Its credit card book grew in line with the industry in January 2022. African Bank had a good January with 6.5% growth in deposits and 2.7% in credit card. Its personal loans growth of 0.8% was below the industry at 1.3%.
  • Only FirstRand had a decline in provisions in January – down 1.4%. Perhaps conservative provisioning in 1H22? On a YoY basis Absa and FirstRand have seen declines in provisions – down 7.8% and 8% respectively. Nedbank and Standard Bank have increased provisions.
  • Tyme Bank and Discovery Bank also showed MoM declines in deposits of 1% and 3.6% respectively. Discovery had a strong lending month with total advances up 7.5% and credit cards up 2.5%.