Banking

KwaZulu-Natal’s banking sector is actively involved in community upliftment.

KwaZulu-Natal has a sophisticated banking and financial services sector. As the province’s leading commercial centre, Durban is also the hub of the financial sector but the province’s smaller towns are well served in terms of retail banking and access to insurance products.

Banking

Merchant banking and investment banking are the most competitive sectors within banking in the country and several international banks have a presence in South Africa. Retail banking, on the other hand, has for many years been dominated by the ‘Big Four’ – Standard Bank, Nedbank, Absa and First National Bank.

Competition is stiff in developing new strategies to incorporate the emerging second economy and the still unbanked rural communities. These new banking means and methods are developing the sector and giving it a new flexibility, diversity and range.

Cellphone- and Internet-banking services are increasingly being rolled out to South Africa’s previously unbanked population. In 2008, FNB invested R55-million in 500 new ATMs around South Africa, in both rural and urban areas. These additions expand FNB’s ATM network to 5 400 machines, servicing a customer base of more than six-million people across the country.

Focusing on the newly banked and smaller towns in rural areas has paid dividends for relative newcomer Capitec. In March 2010, the bank announced a profit for the year to February of R435-million, an increase of 45% over the previous year’s results. With the number of people banking with Capitec also increasing by a significant amount, 37% to 2.1-million, it is clear that Capitec’s foray into retail banking, after initially concentrating on small loans, is reaping rewards. Capitec has 63 branches in KwaZulu-Natal and 400 nationally. This is still some way short of giants such as Absa, which has about 800 branches, but represents a large increase. It opened 38 new branches in 2009 and 50 more are planned for 2010.

Al Baraka Bank has its headquarters at Kingsmead in Durban, which is also the site of its corporate banking division. HBZ Bank, a wholly owned subsidiary of Habib Bank and AG Zurich, operates an Islamic branch in Westville and has branches in Durban and Pietermaritzburg.

Community involvement

Absa’s national initiative to support small businesses in conjunction with national government, the SME Fund, was unveiled in 2010. National funding is in the amount of R267.5-million with six of the country’s provinces having access to the funding to support entrepreneurs who would otherwise not have access to finance.

The fund is driven by the Small Business division of Absa and is targeted at companies that are 100% black-owned, need bridging finance to execute government tenders and do not have the amount of security normally required to support an application for finance.

Standard Bank’s Umlazi Community Investment Fund, launched in 2008 and encompassing loans up to R50 000, has been so successful that the provincial government is investigating rolling it out around the province. In 2009, the Kwandwalane Fund was started. The provincial government and Standard Bank signed a memorandum of understanding in 2010 aimed at accelerating affordable housing delivery. The R1.5-billion Woodmead residential area is an example of the sort of integrated development that both parties want to achieve: the 427-hectare site will accommodate 3 500 families and provide work opportunities, schooling and recreation.

The First Rand Foundation is funded by a contribution of one percent of after-tax profits from each of these companies: First Rand, Wesbank, Rand Merchant Bank, First National Bank, Discovery and Momentum. The Nedbank Foundation spent 19% of its 2008 disbursement of R43.5-million in KwaZulu-Natal.

Insurance

A R30-billion deal announced in March 2010 reshaped South Africa’s life assurance landscape. Metropolitan (valued at R12-billion) merged with Momentum (R18-billion) to form South Africa’s third biggest life assurance company after Old Mutual and Sanlam. Each company had somewhat different strengths and markets so the merger creates a stronger unit with a significant presence on the African continent.
 
In its 2008 Financial Stability Review, the SARB found that South Africa’s long-term insurers remained sound, despite the bad effects of the global economic downturn. Nearly 70% of institutions providing long-term cover had assets-to-capital ratios that were well above minimum requirements. The Association for Savings and Investment South Africa stated in late 2009 that South Africa’s strict controls had helped the country’s financial sector weather the global economic downturn relatively well.














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