SA banking on Africa

South African financial services companies are lured by the growth rates of countries on the rest of the continent.

This week, FirstRand acquired 75% of Merchant Bank Ghana, just months after its banking retail arm, First National Bank, opened doors for trading in Tanzania.

Ghana's economy is expected to grow at 7% through to 2015 while Tanzania's forecast stands at 7.2%.

Absa, SA's largest bank in customer numbers, said this week it is meeting parent company Barclays to combine their Africa operations. The announcement is likely to calm persistent criticism from banking analysts who did not approve of the two banks operating parallel each other on the continent.

Africa's financial services industry is expected to grow at a compound annual rate of 15% to 2020, outpacing GDP growth, according to research by Bain & Company. R etail banking will grow faster than corporate banking and is likely to make up about 40% of banking revenue by 2020. Africa's $107-billion financial services industry will be worth $517-billion in 2020, the study shows.

Nedbank, SA's fourth-largest bank, partnered with Ecobank. By the end of next year, when Nedbank exercises its option to acquire 20% of Ecobank, which operates in 32 countries on the continent, it will overtake its local peers in the rush for Africa.

Most people in Africa do not have bank accounts, which presents opportunities .

Standard Bank recently reported an 84% increase in interim headline earnings from operations outside SA and its return on equity is "heading in the right direction" at 10%, said group CEO Jacko Maree.

The group said income from African operations increased by 38% while deposits surged by 32%.

Standard Bank is bringing its insurance subsidiary Liberty Holdings with it into Africa. Liberty has acquired 51.2% of Total Health Trust Limited, a Nigerian health insurance group servicing government employees and corporate customers.

Santam CEO Ian Kirk said there are a number of opportunities outside SA as penetration of financial services is lower than in SA.

"The standard of insurance is 20- odd years behind that of South Africa," he said.

Old Mutual is eyeing Nigeria's Oceanic Life, a unit of Togo's Ecobank Transnational, and said it is considering opening a general insurer through Mutual & Federal.