Standard Bank SA is seeking opportunities to grow market share in unsecured lending as other businesses come under pressure in a difficult economic environment.
Though it has enjoyed a dominant position in mortgages, deposit-taking and number of retail customers, the banking group still trails the market leaders’ personal loans.
Speaking to Business Day on Friday, newly appointed Standard Bank SA CEO Lungisa Fuzile said he believed there were opportunities for the bank to grow its market share in this area of its franchise.
"We definitely think we can claim a bit more of the profit pools in that space."
Though it has been increasing its market share in the extension of personal loans in recent years, Standard Bank is still behind FirstRand and Capitec in this regard, according to research published by Electus Fund Managers up to January.
But Fuzile conceded operating in the macroeconomic environment was tough.
"It’s a little bit of a zero-sum game for us — as one business grows, another shrinks.
"We’d like to compete in an environment where all our businesses can grow off an expanding base, so we are hopeful that the business climate begins to improve."
Fuzile joined as the CEO of the country’s largest bank by assets in January. He was one of the longest-serving public servants at the Treasury, which culminated in his appointment as director-general in 2011. He resigned at the end of 2017 to take a few months’ sabbatical, which he says allowed him to "recharge" ahead of his appointment at Standard Bank.
Fuzile joined Standard Bank shortly before it achieved a notable milestone in March when it formally completed a significant capital investment into a new core banking platform, which also serves its operations across the continent.
WE DEFINITELY THINK WE CAN CLAIM A BIT MORE OF THE PROFIT POOLS IN THAT SPACE.
"This is going to make us very strong" says Fuzile. "The core banking platform allows us to ‘break the silos’.
"Where previously our franchise was offered along product or business lines, the platform will make the client experience seamless, so the customer does not feel like they are moving across divisions when they access other products," he says.
While the group has not guided investors on how much capital expenditure will decline now that the programme has come to its formal conclusion, Fuzile indicated the amortisation charge relating to the system is expected to increase.
But ultimately this would be offset by the returns being generated from improved customer experiences and opportunities to cross-sell.
Investors will be watching to see if the group’s earnings can support the momentum in its share price when it reports interim results on August 16.