BA900 – February 2022. Nedbank the most consistent performer, for the wrong reasons though.
- Annual growth rates in the SARB’s gross loans and advances category improved from 4% in Jan 22 to 4.2% in Feb 22. It’s been around these levels for the past quarter. On our methodology, industry advances growth is 4.6% YoY, with 1% MoM. All categories had positive MoM growth apart from corporate overdrafts (-1.2%) which had a strong January and has the best YoY growth (+9.5%). Retail lagged Corporate MoM but remains stronger YoY (6.4% vs 2.8%). MoM moves include mortgages (+1%), credit card (+0.9%), instalment sales (+0.8%) and personal loans (+0.7%).
- Of the major banks, Nedbank has had the worse start to 2022 with two consecutive negative growth months (YTD -0.3%). Absa bounced back sharply in Feb 22 after negative growth in Jan (YTD 1.4%). FirstRand achieved a small MoM gain with YTD growth of 1.6%. Standard Bank also bounced back from a weak January – YTD 0.9%. Investec has made a positive start to the year with 3.3% YTD growth.
- Apart from personal loans, Nedbank continues to lose market share in the major lending categories YoY. By the narrowest of margins FirstRand has reclaimed the dominant market share in credit cards, a position it relinquished a couple of years ago. However, FirstRand continues to lose market share (to Standard Bank and Absa) in instalment sales, a market it dominated two years ago. Absa dominates market share gains YoY with a 0.9% gain in overall advances, FirstRand down 0.1%, Standard Bank up 0.1% and Nedbank down 0.4%.
- After a decline in industry deposits in January, February achieved 0.6% growth bit still at a level below December 2021. FirstRand and Standard Bank have managed YTD growth with Nedbank the biggest decliner YTD at 3.8%. Retail growth is weaker than overall growth at -1%, with no major banks managing growth in retail deposits YTD.
- Capitec’s deposits rose after shrinking in January and are now displaying positive YTD growth of 1%. Its personal loans’ book grew 0.6% MoM, below the sector at 0.7%. Its credit card book contracted 1.5% in February and remains flat YTD. African Bank has had a good start to 2022 with 7.3% YoY growth in deposits and 2.7% and 0.8% in credit card and personal loans respectively.
- On a YoY basis Absa and FirstRand have seen declines in provisions – down 6.9% and 7.5% respectively. Nedbank and Standard Bank have increased provisions – they are also the two major banks increasing personal loan market share.
- Discovery Bank also showed MoM declines in deposits in January and February, however its credit card book is up 2% YTD.
- Based on SARB data the improving sector ROE’s have stalled at 13.8%, since rising from 7% in Jan 21. This mirrors the trend in NIM’s which are stabilising at 3.9% after troughing at 3.7% in Jan 21. The cost:income ratio is ticking up again and it would be interesting to observe it in these inflationary times. The declining trend in NPL’s has also plateaued over the past two months at an elevated 4.5%. These are trends to monitor.
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