Banking

Stanbic, the African operations of the Standard Bank Group, is acquiring major shares in Africa's leading banks taking advantage of the privatisation programmes.

Unlike Standard Bank's other operations that have been impacted by reduced opportunities and the challenge to substantially increase credit provision in a deteriorating in global credit market, Stanbic continues to show signs of good growth.

Stanbic has managed to survive the harsh business climate sweeping across Africa. The bank extended its list of new acquisitions expanding its operations in Uganda and Malawi.

In the past financial year ending December the groups African operations, north of the Limpopo grew headline earnings by 48 percent, assisted by vibrant performance from recent acquisitions.

It made two significant acquisitions in Africa over the past 12 months. It acquired Uganda Commercial Bank for $19.5 million and $13.5 million for Commercial Bank of Malawi (CBM).

Standard Bank deputy chief executive, Myles Ruck says the group's performance in some African states was enhanced by lower credit loses due to improved recoveries and margins. Other factors that contributed to success include an increased focus on treasury functions, re-pricing, new products and a broader portfolio of banks creating sustainable earnings growth.

"One other thing that delivered results is new management in Botswana, Nigeria, Swaziland and Kenya where we have operations. The last financial year, I must say was quite promising," says Ruck.

Sim Tshabalala Stanbic Africa managing director says the group was only interested in acquisitions that fit its strategy and resources. "We're always interested in opportunities. But we have a growth strategy with priorities based on resources available," says Tshabalala.

The acquisition of 60 percent stakes in the Commercial Bank of Malawi, a deal that was finalised towards the end of 2002 confirms Stanbic's ambition to gain its foothold on Africa. By November CBM is to change its current image and trading name, according to chief executive, Victor Mbewe.

The change is aimed to achieve complete transformation of the banks internal and external operations to match those of Stanbic banks in the 17 countries where the group is represented.

"We have been a passive bank in the past. Now the new shareholders want a vigorous sales approach and improved efficiency and service delivery," Mbewe told reporters in the commercial city of Blantyre.

He was however open about the ongoing restructuring process, which he said, will see the bank retrench some of its 800 staff as the automated bank would no longer need most of their services. Of course the positive results recorded by Stanbic are not without hitches. Because of competitive forces and unsure credit provisions things have not been good for the bank in Tanzania - the east African country that is just rejuvenating its trading and business environment after years of poor performance.

Zimbabwe, once Africa's breadbasket, is another challenge for the bank. But Tshabalala says the challenges of Zimbabwe do not typify Africa, "but they are not

Unlike Standard Bank's other operations that have been impacted by reduced opportunities, Stanbic continues to show signs of good growth

unusual in the places where we operate. These challenges have caused us to be tight on risk management and cost control."

Tshabalala says the team in Zimbabwe is superb and would hold its own against any international team from Europe, Asia or the America's. "They have continued to provide money transmission, liquidity and trade Finance services and products in that market without being tempted into activities that fall outside the four corners of the law".

Stanbic's strategy in Zimbabwe entails protecting the integrity of the assets, looking after the interest of the staff and stakeholders and increasing the volumes of throughput through its delivery channels.

Despite the political and economic uncertainty in Zimbabwe, Stanbic performed well in local currency terms. It made Z$ 1.672 billion in headline earnings at an ROE of 102 percent an ROA of five percent and cost to income ratio of 44.6 percent.

The performance was however diluted by the Zim dollar to SA rand exchange rate. Tshabalala says when the time is right, Stanbic will appropriately capitalise its business in Zimbabwe. In the meantime he is concentrating on protecting the jobs of its 556 staff and the well being of its customers.