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Absa loses nearly 300 000 retail customers

Entry-level segment takes hit, but Private Bank and ‘Affluent’ segments are growing.

Barclays Africa Group has reported a decline of almost 300 000 customers with transactional accounts at its South African retail banking unit, Absa, over the past year. As at June 30 2017, it had 5.96 million ‘transactional’ customers from 6.25 million a year ago, a decline of 4.9%. This is the first time Barclays Africa has disclosed this metric along with its financial results. It said on Friday that this decline was “mainly driven by bank-initiated closures of dormant accounts in the entry-level segments”.

Overall, customer numbers in South Africa (retail and business banking) were down 3% to 9.286 million, despite what the bank termed “good growth in new-to-bank customers in [its] target segments”. Between 2011 and 2013, it lost nearly two million customers (see Absa is bleeding customers and Absa set on regaining top retail bank title). It took some big knocks with the loss of social grant related accounts, with 850 000 of those being shut in 2013.

It is under pressure on practically all fronts in the retail segment. Its market share in home loans (measured by assets) declined by one percentage point to 22%, while its card business underperformed in the store card portfolio (the Edcon book and Woolworths Financial Services joint venture). Its reduced risk appetite also saw its market share in personal loans disbursements decline to 7.9% as at December 31 2016, from 9.9% at the end of 2015 (as per the National Credit Regulator).

Jason Quinn, financial director at Barclays Africa Group said on Friday “We continue to lose share in mortgages, although we aim to increase our share of new business in the second half, without increasing our risk profile… Our retail customers fell 3% to 8.6 million in South Africa, largely due to continued dormancy”.

New account openings of the Pep Plus account, launched with Pepkor in 2014, were suspended earlier this year due to what the bank terms “elevated fraud levels”. It says excluding this offering, it did see an increase in new-to-bank customers. Quinn says this product will be relaunched in September.

Aside from this, continued Quinn, “new offerings such as MegaU for youth, a Gold Value Bundle and the Student Silver account showed positive initial results in the middle market and feeder streams. It was pleasing to see that our Private Bank and Affluent customer numbers grew 4% and 12% respectively.”

The ‘Affluent’ segment is defined as customers who earn more than R300 000 a year: effectively the Absa Premium Banking product. The salary requirement for its Private Banking packages is R750 000 a year.

 

30 June 2017

30 June 2016

South Africa customers (Retail and Business Banking)*

9.286 million

9.484 million

Retail customers

8.647 million

8.884 million

Transactional customers

5.96 million

6.25 million

Business banking customers

352 000

366 000

* Excluding Edcon and Woolworths Financial Services (the latter was at 1.8 million active accounts as at 31 December 2016)

Total income in the Transactional and Deposits segment was up 4% to R6.144 billion, while non-interest income (i.e. fees) totaled R3.643 billion in the six months, from R3.558 billion a year ago (up 2%). While this segment includes deposit-only customers and accounts (although these are arguably minimal), it is still useful to follow the trend in the average non-interest income the bank is able to generate per customer per month.

Using the transactional numbers above, this equates to R102 per month (on average) in the January to June 2017 period, versus R95 per month (on average) in the January to June 2016 period, an increase of 7%.

The bank says “Transactional income remained under pressure due to the planned migration of customers from branches to self-service and digital channels, the simplification of the product offering as a well as a lower customer base. The financial impact of the product simplification and transaction migration was approximately 4%.”

Retail banking (SA) headline earnings – H1 2017

 

30 June 2017

30 June 2016

Change

Home Loans

R764m

R838m

(9%)

Vehicle and Asset Finance

R431m

R411m

5%

Card and Payments

R658m

R706m

(7%)

Personal Loans

R185m

R219m

(16%)

Transactional and Deposits

R1.204bn

R1.392bn

(14%)

Other

R150m

R123m

22%

 

R3.092bn

R3.443bn

(10%)

Absa’s Business Banking customer base also declined by 4% to 352 000 from 366 000 in June 2016. This unit services two segments: Enterprises (via branches) with an annual turnover of up to R20 million, and Commercial (via dedicated relationship teams) with annual turnover between R20 million and R500 million. It said the decline in customer numbers was felt “mainly in the Enterprise segment”.

* Hilton Tarrant works at immedia. He can still be contacted at hilton@moneyweb.co.za.

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ABSA is definitely loosing customers, and I am one of them.
After 25 years, I am sick and tired of going to a shop, doing some shopping and when I want to pay, then the card is “denied”. When phoning ABSA, I get the reply “We do not have your cellphone number on record”, or “We do not have a copy of your ID”. They do not phone or send a mail requesting it. One idiot just suddenly decide this card needs to be blocked. When I want to give them my phone number, then they say “No, you have to come into a branch”.
Also they do not deliver replacements for expired card, like FNB, no “I have to come into the branch”. ABSA is still living in the sewenties. I am busy changing all my debit orders to FNB.

I currently live abroad. Despite ABSA’s claims on their website that they make international banking hassle-free (their words), it simply isn’t true. When I am 8000km away and I am not getting my RVNs, coming into a branch simply isn’t an option… And funnily enough, my R5.50 Capitec account works just fine from here. Closing an account long distance is also a bit tricky, but my 26 year relationship with ABSA is drawing to close. Soon.

I left ABSA about 5 years ago, couldn’t handle standing in line for hours to submit simple documents or get a bank statement + the staff were really incompetent etc. Moved over to FNB, they seemed to be more techno friendly, I have had some bad experiences but overall really good. I like the eBucks add on with FNB, a few simple changes to my banking habits and I reached a level 5 and I get a lot back in ebucks every month which I deposited into a 12 month fixed savings account.. so I actually saved some spending.

“The ‘Affluent’ segment is defined as customers who earn more than R300 000 a year. The salary requirement for its Private Banking packages is R750 000 a year.” What a joke.

And the wealthy think they have status and style simply because they have an account with a fancy name and a card with a fancy colour, and they have the occasional favor done by a bank ‘personal manager’. And for this they fork our fortunes every month while those who are frugal with their banking charges pay next to nothing – as it should be and also get by with safe banking. But, it is important to note that class is something you are born with, and style (that comes with fancy bank cards) is something you buy. It is your call, do you have class or do you have style? hehehe

Erm.. one is not “born with class”. Having “class” is generally acquired through discipline (enforced by parents that are not morally corrupt and want their children to be well adjusted members of society) and the appreciation of manners (i.e. considering others before oneself, being respectful of one’s betters, and being polite when in polite/delicate company).. “Manners Maketh Man”. Being born rich or privileged does not automatically qualify you as having “class”, but neither does being a miser.

I would also like to state that while some bank’s Private Banking offerings are worth less than the paper they are written on, some actually have some very useful attributes and have private bankers on hand to assist wherever required and are very good at what they do. (Investec comes to mind – and no I don’t and have never worked there.. I just hear good things..). But in the end it boils down to personal preference and individual experiences.. And if having a silver/titanium as opposed to gold card makes you feel good about yourself, why not? It’s usually cheaper than a monthly gym membership 😛

”Genius may have its limitations, but stupidity is not thus handicapped” – Elbert Hubbard (1856 – 1915)

I retired from the Barclays Africa Group (Corporate Division) a couple of years ago..I also worked for Volkskas Merchant Bank many moons ago.. some of the systems that we introduced 30 odd years ago still existed in a derivative form in Absa today….

I actually feel very sorry for most current employees as ”systems” has been the ”achilles heel” for many years now…more so that Barclays Plc is making like ”Dold and Duck”. The average sales person for many years now does not sell products and services to their corporate base anymore, they are all busy running around trying to stop the gaps in bad service delivery due to system failures etc…

The only advice that I got for Amaria and Co is…you need to fix this and re-deploy your sales staff where it matters…

Absa must have lost at least 1,5 million customers the last 5 years, methinks and their management must remember that you loose your affluent customers first…….

Used to be a Commercial Customer (for approx. 13yrs) – with dedicated relationship teams bla-bla-bla… We left 3 yrs ago – not a day of regret about that decision!

Terrible bank – ARROGANT, does not care about your business (the “prosper” motto makes me want to puke), credit hides does not have a clue about the business – and does not want to know either etc etc.

NEVER IN MY LIFETIME AGAIN

PS Business has not been better Absa…

During 2001-2002 I was staff working in ABSA Towers South in downtown Joburg. The only reason I was a customer, was because of some limited staff benefits. However, I have never considered this a viable bank for my ongoing financial needs. The comments section is more interesting than the article itself.

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