Absa has been ‘bleeding’ market share

South Africa’s second biggest retail bank, Absa, has been bleeding market share and is now drumming up its initiatives to regain lost ground.

This can be taken out of an announcement released yesterday by Barclays Africa Group, former Absa Group. The announcement said Barclays Africa Group’s “operational plan to restore growth and address the challenges within its Retail and Business Banking (RBB) unit is starting to pay off.”

The announcement comes on the back of a significant shift in the dynamics of the local banking industry. Over the past five years or so there has been a sustained challenge for market share from second tier banking players like African Bank and Capitec Bank.

Nedbank which entered the post 1994 era as an elite banking operation woke up in the mid 2000’s to the reality of operating in an emerging market and has also staged a serious challenge for the broader banking market. First National Bank (FNB) has operated an aggressive switch to FNB campaign, the famous Steve campaign.

Meanwhile Absa has had to bed down a process of integration into the systems of its new parent company Barclays. Loss of a considerable number of senior personal has not helped the situation. And there was a major booboo in the management of mortgage which caused a significant rise in impairments and a decline in earnings in 2012.

Implications coming from the statement released yesterday may be that Absa, in dealing with integration issues, took its eye of the ball, the market.

Consider the following comment from Barclays Africa’s head of Retail and Business Banking, Craig Bond. “The business has come through a period of restructuring and internal reorganisation. We can now focus on customer retention and building a strong brand.”

Added Bond, “We have spent significant time on a detailed analysis of how we lost market share. We have developed and are executing on a comprehensive transformation plan to regain customer and client dominance in key markets.”

The business is already seeing results. There are already early signs of balance sheet and customer growth and RBB is set to deliver a good set of pan–African results. I am confident about our progress on the journey towards making Retail and Business Banking the ‘Go-To’ bank on the African continent.”

Yesterday’s announcement noted that “In July this year, the Group made a commitment to invest R1.2 billion to reshape its digital channels and its ATM and branch networks. Additionally, it internally launched a 12-point plan aimed at turning the tide on customer service and stemming transactional customer attrition.”

“I am confident that we have the right leadership team and strategy in place, as well as a credible and clearly articulated plan for continual growth to build a world class bank and become customers’ go-to choice to help them prosper.”

The group lists a number of awards as sign of a turnaround in fortunes. The market will be watching the next financial numbers with great interest.

Absa share price registered a loss of 127c or 0.89% to close at R141.68 on the JSE. While it’s main competitor Standard Bank registered a gain of 13c or 1.12% to close at R122.00. Nedbank closed flat at R210.70.


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