StanChart to ride Africa consumer boom
Tag: Africa consumer, Africa consumer boom
Summary: Growth of earnings from Africa has been accompanied by slower growth in costs, Bertamini said, meaning the new outlets would be funded internally.
Standard Chartered has been repositioning its retail businesses on a global basis. In markets like Kenya, one of its key African markets.
It has already introduced service guarantees, where it pays a customer or donates to charity if services like loan disbursements are not carried out on time.
The consumer business in Africa made up $131 million of the bank's total pretax profit of $6.78 billion in 2011 but earnings rose 27 percent from the previous year on the back of growth in segments like personal loans.
"We have got roughly in Africa about 170 branches and our goal is to double that over the next 3-5 years and we will be increasing that by a 100 branches in the next 18 months," Steve Bertamini, global head of the consumer banking, told Reuters in an interview on Tuesday.
He said the new braches would be in Nigeria, Botswana and Ghana.
Growth of earnings from Africa has been accompanied by slower growth in costs, Bertamini said, meaning the new outlets would be funded internally.
Big multinationals like Standard Chartered have stepped up their game in Africa following years of fast growth and the emergence of a consumer class, thanks to higher earnings from commodity exports and the spread of telecoms in the last decade.
Bertamini said the consumer boom would stay intact for several years to come, thanks to trends like urbanization and investment in infrastructure which would drive growth.
"There will always be socio-political-economic bumps on the road but we don't believe that alters the long-term trajectory of Africa," he said.
"We are trying to put our money where our mouth is," Bertamini said, adding that ultimate goal was to double earnings through initiatives like focusing on the consumer.
"We are trying to double the size of the income, we are trying to double the profit and we are trying to ideally double the customer base which will be a bit more challenging," he said.
Apart from personal loans and wealth management, Standard Chartered wants to secure a larger share of the growing small and medium enterprise (SME) segment, which accounts for a big part of economic activity in Africa.
"The biggest play is SMEs actually and that is one of the sweet spots that we are really focused on, not only in Africa but certainly in Asia and the Middle East," Bertamini said.
He said that the consumer business in Asia, where the bank makes more than three quarters of its profit, had started the year well with room for more growth.