PRETORIA – The big banks in South Africa are under pressure when it comes to non-interest revenue through banking fees and are trying to combat this through new client acquisition, among other things.
In its interim results presentation on Thursday, Standard Bank (JSE:SBK) Group Finance Director Simon Ridley told analysts and the media that non-interest revenue was up 9%, saying that customer acquisition made up for the sacrifice in price of the products.
CEO Jacko Maree elaborated on this, stating that the bank did not raise its prices for customers in January as it normally does and even announced further price cuts in April.
South Africa’s largest bank by market capitalisation, Standard Bank is still behind Absa (JSE:ASA) when it comes to customer numbers locally. Although Absa seems to be the only bank among the ‘big four’ to be losing, rather than growing, customer numbers.
Absa currently stands at around 12.2m clients, but it has lost about 100 000 in the last year, while Standard Bank gained more than a million clients to bring its number up to 10.5m.
FNB has confirmed to Moneyweb that since May 2011 to May this year it has opened 1.7m new accounts, bringing its total to 7.6m and a 22% for the year. At the release of FirstRand (JSE:FSR)’s annual results in February, Michael Jordaan said that the bank is opening about a hundred thousand new accounts every month.
Nedbank (JSE:NED) announced in August that it now has 5.6m clients in retail, with a net gain in clients of 585 000 for the last six months and gaining 1.145m net clients over the last three reporting periods.
Standard Bank results
In its results, Standard Bank reported that operating costs for the six months were up 17%.
One percentage point of this increase was made up by increased costs targeted at marketing for client acquisition to the tune of 174m for the six months.
“This is something we need to attend to. We cannot allow costs to continue to increase at this rate in the future,” Ridley said.
Standard Bank’s first half profit was up 9% and it declared an interim dividend of 212 cents per share.
Next generation wave
Standard Bank was second out of the blocks with the release of its banking app to customers. Maree said that over 50 000 customers are already using it, with 500m transactions going through the app in the first seven weeks.
He indicated that electronic and online channels are becoming more important as volumes through traditional physical channels were only up 1%, but volumes in the electronic and online channels were up 13%.
He said Standard Bank is making progress on building the “next generation bank” for Personal and Business Banking.