<\/p>\n
South Africa does not have too many banks despite growing competition in this space, according to Investec Bank CEO Cumesh Moodliar. <\/p>\n
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. <\/p>\n
Read: SA banking heats up as Sanlam eyes 2027 launch<\/p>\n
\u201cSouth Africa is not overbanked,\u201d Moodliar said, while acknowledging that the market is not growing in a weak economy.<\/p>\n
\u201cParticularly if I look at our South African business, it\u2019s coming out of taking more market share versus market growth.\u201d<\/p>\n
He admits that this is a \u201ctough operating environment\u201d but believes there is still opportunity \u2013 and that \u201cultimately competition is really good for consumers\u201d in this space.<\/p>\n
Competition forces banks to be competitive on pricing and \u201cfront-footed in the way we engage with clients\u201d.<\/p>\n
New (and newish) banks<\/p>\n
South Africa\u2019s 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.<\/p>\n
Discovery Bank made its first year profit of R370 million, after seven years of losses, having launched in 2019.<\/p>\n
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Read:
Discovery earnings jump 21% as bank turns profitable
\u2018Super bank\u2019 to drive Discovery\u2019s next phase of growth<\/p>\n
Retailer Pepkor has received a prudential licence to run its PlusB bank from March 2027, using its 6 000 store base \u2013 including about 2 715 Pep stores in nearly every town in the country. It is targeting its 18 million loyalty customers.<\/p>\n
Read: Pep\u2019s new bank \u2018plusb\u2019 will cost just R920m to build<\/p>\n
Shoprite\u2019s 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.<\/p>\n
OM Bank<\/p>\n
Old Mutual, which had a stake in Nedbank until 2021, launched OM Bank in August 2025 and reported 742 000 customers by June. <\/p>\n
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.<\/p>\n
Read:\u00a0Old Mutual wants South Africa\u2019s newest bank profitable by 2028<\/p>\n
Outgoing Old Mutual CFO Casper Troskie said in a recent call with Moneyweb he believes OM has \u201ca very competitive offering\u201d by using its existing client base and infrastructure. <\/p>\n
\u201cWhere 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.\u201d<\/p>\n
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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.<\/p>\n
By using its existing roughly 7.5 million insurance and investment clients, it has access to capital.<\/p>\n
By way of example, it already has a R16.4 billion gross loan book, with R1.4 billion in deposits.\u00a0<\/p>\n
Troskie also added the banking profit pool in South Africa is \u201csignificantly bigger than the insurance profit pool\u201d, referring to the ability to offer loans.<\/p>\n
Analyst\u2019s view<\/p>\n
\u201cI don\u2019t think South Africa necessarily has too many banks,\u201d says Keagan Higgins, investment analyst at Anchor Capital.<\/p>\n
While acknowledging that it is a very competitive market, he believes there is still room for different models to work.<\/p>\n
\u201cI also think it is difficult to argue that the market is \u2018obviously\u2019 overbanked, when some of the largest banks are still growing and earning very strong returns.<\/p>\n
\u201cThat does not mean every new entrant will succeed, but it does suggest there is still profitable growth to compete for.\u201d<\/p>\n
Higgins adds that a lot of the newer entrants are \u201ccoming from quite different starting points\u201d.\u00a0<\/p>\n
\u201cOld Mutual, Discovery, Pepkor and Shoprite already have large customer bases [and] distribution or ecosystems that they can use to build financial services around,\u201d he says.<\/p>\n
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\u201cThat is quite different from starting a new bank from scratch.\u201d<\/p>\n
Operation Vulindlela benefitting the economy\u00a0<\/p>\n
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.<\/p>\n
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).<\/p>\n
Investec Bank SA CEO Cumesh Moodliar. Image: Supplied<\/p>\n
Says Moodliar: \u201cWhat we\u2019ve 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.\u201d\u00a0<\/p>\n
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\u2019s water issues.\u00a0<\/p>\n
\u201cWe\u2019ve 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,\u201d says Moodliar.<\/p>\n
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.<\/p>\n
#overbanked #Investec<\/p>\n","protected":false},"excerpt":{"rendered":"
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