Access Bank South Africa sees success amidst tough competition

Nigeria’s Access Bank PLC faces tough competition from incumbents as it ramps up operations in South Africa, but it could find success in niche markets.

On May 27, Access renamed its recently acquired unit Grobank Ltd. as Access Bank South Africa Ltd. At a press conference to mark the rebranding, the unit’s managing director, Bennie van Rooy, said the bank would launch a “full retail banking suite” and highlighted opportunities to provide trade finance, treasury services, loans and international payments to corporations.

Access Bank has long had subsidiaries scattered across sub-Saharan Africa, but they have not been key priorities. Such was the scale of the opportunity in Nigeria that it made little sense for the country’s banks to invest much in their foreign subsidiaries when they could make more money on a single domestic deal, said Ronak Gadhia, director of research on sub-Saharan African Banks at EFG Hermes.

In the first quarter, Access’ operating income from Nigeria totaled N180 billion, or $437 million, compared to N26 billion from the rest of Africa, S&P Global Market Intelligence data shows.

But unfavorable regulatory changes have spurred Nigeria’s major banks to again focus on boosting their foreign operations. The central bank has increased cash reserve ratio requirements, meaning a large chunk of banks’ balance sheets are sitting in cash earning nothing, while other reforms have limited certain bank fees, Gadhia said.

Access Bank, which aims to expand its customer base to 100 million by 2022, has recently bought banks in Mozambique and South Africa; including the latter, its African footprint now spans 10 countries. It also aims to launch operations in Guinea in 2021 and is acquiring a bank in Botswana.

Aside from Access’ Ghana unit, whose 2020 pretax profit rose 58 per cent year over year to N23.4 billion, its other African subsidiaries made a combined annual pretax profit of N5.11 billion, four per cent of the group total, according to Market Intelligence calculations.

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