By Adelaide Changole.
A unit of FirstRand, Africa’s biggest bank by market value, is stepping up lending, wagering that healthier balance sheets and improved borrower affordability will fuel loan growth in South Africa despite fierce competition.
“We are expecting better growth rates of advances in the next 12 months because impairments stabilised,” said First National Bank chief executive officer Harry Kellan in an interview. “While the strain in consumers still continues, the affordability for some individuals has improved, which means that our lending capacity has increased.”
FNB, which generates more than half of its parent’s normalised earnings, pulled back on loan growth after the 2020 coronavirus pandemic, focusing on low- to medium-risk customers as households came under pressure.
FNB is also intensifying its focus on small- and medium-sized enterprises to grow its earnings.
“We are the largest SME bank in the country, “Kellan said, citing the 6% gain in commercial clients in the year to June. “And we still see growth in that.”
The bank is rolling out a plan that will allow some of its licensed businesses to act as agents to enable customers to withdraw and deposit money.
“That supports the SME, it supports the retail customer, the SMEs make money, and we save money,” Kellan said.
FNB also plans to grow its footprint in Ghana and Zambia, where improving macroeconomic conditions are creating opportunities for further expansion. According to Kellan, the Ghanaian business still requires capital to recover from the impact of the 2022 sovereign debt restructuring, while ongoing reforms in Zambia and a growing push for renewable energy projects have boosted its lending appetite in the market.
“We are happy to do greenfield investments,” Kellan said. “If there’s an opportunity to bolt onto a business and make it more scalable and enhance it,” then we will consider it, he said.