SA not overbanked – Investec

South Africa does not have too many banks despite growing competition in this space, according to Investec Bank CEO Cumesh Moodliar.

He was responding to a question on a media call on Friday as the dual-listed specialist high-end banking group issued a voluntary trading update.

Read: SA banking heats up as Sanlam eyes 2027 launch

“South Africa is not overbanked,” Moodliar said, while acknowledging that the market is not growing in a weak economy.

“Particularly if I look at our South African business, it’s coming out of taking more market share versus market growth.”

He admits that this is a “tough operating environment” but believes there is still opportunity – and that “ultimately competition is really good for consumers” in this space.

Competition forces banks to be competitive on pricing and “front-footed in the way we engage with clients”.

New (and newish) banks

South Africa’s largest insurer, Sanlam, is the latest company to receive approval to roll out transactional banking services in partnership with TymeBank, with a full launch planned for the first quarter of 2027.

Discovery Bank made its first year profit of R370 million, after seven years of losses, having launched in 2019.

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Read:
Discovery earnings jump 21% as bank turns profitable
‘Super bank’ to drive Discovery’s next phase of growth

Retailer Pepkor has received a prudential licence to run its PlusB bank from March 2027, using its 6 000 store base – including about 2 715 Pep stores in nearly every town in the country. It is targeting its 18 million loyalty customers.

Read: Pep’s new bank ‘plusb’ will cost just R920m to build

Shoprite’s Money Market Account enables customers to deposit money and Sassa grants with no monthly fees, a R5 cash withdrawal fee, and a maximum balance of R25 000.

OM Bank

Old Mutual, which had a stake in Nedbank until 2021, launched OM Bank in August 2025 and reported 742 000 customers by June.

It plans to break even by 2028 and increase its loan book, which in June stood at R16.4 billion, to between R23 billion and R26 billion by 2028.

Read: Old Mutual wants South Africa’s newest bank profitable by 2028

Outgoing Old Mutual CFO Casper Troskie said in a recent call with Moneyweb he believes OM has “a very competitive offering” by using its existing client base and infrastructure.

“Where we see the very strong competitive advantage of our bank is the fact that we can leverage long-term funding that we raise as Old Mutual that will support lending in the bank.”

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He said new banks struggle to raise the funding for lending quickly, because they have to wait before they can attract enough deposits to finance loans.

By using its existing roughly 7.5 million insurance and investment clients, it has access to capital.

By way of example, it already has a R16.4 billion gross loan book, with R1.4 billion in deposits. 

Troskie also added the banking profit pool in South Africa is “significantly bigger than the insurance profit pool”, referring to the ability to offer loans.

Analyst’s view

“I don’t think South Africa necessarily has too many banks,” says Keagan Higgins, investment analyst at Anchor Capital.

While acknowledging that it is a very competitive market, he believes there is still room for different models to work.

“I also think it is difficult to argue that the market is ‘obviously’ overbanked, when some of the largest banks are still growing and earning very strong returns.

“That does not mean every new entrant will succeed, but it does suggest there is still profitable growth to compete for.”

Higgins adds that a lot of the newer entrants are “coming from quite different starting points”. 

“Old Mutual, Discovery, Pepkor and Shoprite already have large customer bases [and] distribution or ecosystems that they can use to build financial services around,” he says.

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“That is quite different from starting a new bank from scratch.”

Operation Vulindlela benefitting the economy 

In its trading update, Investec Group CEO Fani Titi praised the work being done by government and business to address the bottlenecks in the economy.

Investec guided that its earnings in its South African business for its half-year to end September will be 6% higher than the prior half (its UK business, which is facing intense competition and lower interest rates, is expected to report earnings 2% to 6% lower).

Investec Bank SA CEO Cumesh Moodliar. Image: Supplied

Says Moodliar: “What we’ve been quite excited about has been the shift in the operating environment in SA, largely because of the benefits that have been achieved through Operation Vulindlela.” 

Operation Vulindlela, a joint initiative of The Presidency and National Treasury to identify critical blockages to economic growth, has worked to liberalise the electricity market and is working on the country’s water issues. 

“We’ve seen quite a bit of initial investment in the energy infrastructure space. A lot of that now is going to be shifting to [power] transmission and distribution, and water,” says Moodliar.

He adds that his energy and infrastructure finance team is engaging extensively with clients, and the bank is also seeing promising developments in the income-producing real estate sector.

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