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Nedbank wins market share

Johannesburg – Absa’s tight fist in granting credit is eroding its market share.

Standard Bank’s market share is also shrinking, particularly in the housing mortgage market, because of disputes with mortgage originators.

Nedbank is the big winner, while FirstRand is gradually expanding its market share.

According to a report by Standard Bank?s equity research division, in May Absa had the largest average contraction in advances, with 0.44 of a percentage point.

In private and overdraft facilities the group saw a hefty loss of market share – 0.2 of a percentage point. In home loans its loss was 0.8 of a percentage point.

Traditionally, with a market share of more than 30%, Absa has been the largest player in the home loan market, but since the middle of last year it has been restricting its credit growth.

The data show that Nedbank is the biggest gainer of market share, with growth of 0.19 of a percentage point while the other banks are drifting.

Its market share in home loans has appreciated by 0.6 of a percentage point, in private overdraft facilities by 0.29 of a percentage point, and in instalment finance by 0.26 of a percentage point.

Standard Bank in effect gained market share in overdraft loans, but lost a significant 0.2 of a percentage point in home loans and 0.15 in instalment finance.

Between 2003 and 2007 Standard Bank significantly increased its market share in mortgages and credit cards.

This banking group no longer uses the services of mortgage originators to obtain loans on clients’ behalf. The reason that it gives is that the fees mortgage originators demand are too high.

Nedbank’s campaign to enlarge its market share continues unabated. Doug Hardie, the chief executive of client services, says the group is now undertaking to take over clients? overdrawn accounts from other banks with a single enquiry.

Prospective clients are asked to test Nedbank’s promise. “If Nedbank does not succeed with the transfer, it undertakes to donate R50 to a charitable organisation,” says Hardie.

Resource: Fin24.com

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FNB breaks ranks

Johannesburg – In a market environment where banks’ strict lending criteria are strangling the housing market, First National Bank (FNB) has taken the first step to make buying a house easier, by reducing its deposit requirements.

At the same time the bank has come up with a rapid sales plan for sellers under pressure, in which their houses are sold by an estate agent rather than on auction.

Other banking groups have not yet followed FNB’s footsteps and are still keeping to their strict deposit requirements.

Sean O’Sullivan, head of sales and marketing at FNB’s home loan division, says the bank currently requires a deposit of 5% of the purchase price and could possibly move towards requiring a 2% deposit.

The chief executive at FNB’s home loan division, Jan Kleynhans, points out that considerations in determining the deposit include the quality of the suburb where the purchase is required and the market conditions.

In areas over which the bank has reservations a larger deposit may be required.

On Wednesday Luthando Vutula, managing director at Absa home loans, declared that Absa still requires a 15% deposit from Absa clients and 30% from other clients.

Standard Bank spokesperson Ross Linstrom notes that for new loans of up to R300 000 Standard Bank clients with a cheque account need a deposit of 5%, for loans of R300 000 to R2.5m a deposit of 10%, and for those above R2.5m a deposit of 20%.

FNB’s new rapid sales plan involves the houses of sellers in financial straits being sold by appointed agents, so as to get the best price for the seller, instead of selling them on an auction where properties fetch 20% less.

For buyers of these houses 100% mortgage finance is available from FNB if they meet certain criteria. O’Sullivan explains this is in order to help buyers who have previously not had access to the market. The properties are valued by professional valuer and some 300 such properties are currently being sold a month.

Resource: Fin24.com

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Standard Bank boosts lending

Johannesburg – In terms of lending, Standard Bank is leaving other banks in the shade.

In the current straitened economic conditions, Standard has expanded its lending while other banks have clamped down on advances.

The latest DI900 Reserve Bank data for August shows that the lending market is still subdued. Growth in advances at all banks was only 0.3% compared with July. Year on year (y/y) it was 1.8%, compared with 2% in July.

Consumer retail loans, including mortgages, credit cards and overdrawn facilities, rose 3.6% y/y compared with 4.2% in July. Growth in advances in the corporate sector continued the declining trend of -0.6% in July with -0.8% in August.

An analyst says banks are under great pressure to improve the quality of their loans in a market where bad debts have increased sharply. “This is because the current cost of capital is higher than the return.”

In this environment Standard Bank is the only bank showing advances growth worth mentioning, although still from a low base. Its 4.7% increase y/y is low, but better than Nedbank’s -3.4% and FirstRand’s -0.3%.

The only category of advances showing some appreciation is mortgage loans. The average growth at all the banks was 3.1% for the month, compared with 6.2% in instalment finance and 2.3% for credit cards.

Nedbank was the biggest loser in terms of mortgages, because its market share dropped from 23.3% to 21.5% y/y. Standard Bank gained the most ground with a market share of 27.2% compared to 26.4% a year ago.

If this trend continues, Standard could soon dethrone Absa as the bank with the strongest market share in mortgages. Absa’s currently has 29.8% of the market, compared to 29.2% a year ago. Its mortgage-loan market share was above 30% pre-2008.

Standard’s focus on the home-loan market is ostensibly at the expense of riskier categories of advances like instalment finance, overdrafts and credit cards.

In the credit-card domain Standard, with its market share of 36%, is still the leader, but year-on-year growth was a negative 0.3%.

Resource: Fin24.com

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