New Absa boss ‘comfortable with strategy’
• CEO does not expect to make broad changes to the choices the group has made
Absa CEO Daniel Mminele, who presided over his first annual results presentation on Wednesday, says he will conduct a review of the business before plunging into any adjustments in the group’s strategy.
Mminele became the bank’s first black CEO in January after 20 years with the Reserve Bank, where he served as deputy governor for a decade before his departure in June 2019.
His appointment may be considered even more significant for transformation as the group traces its origins to an amalgamation of traditionally Afrikaans financial institutions such as Bankorp and Volkskas.
It is also preparing to finally draw the curtain on its 15-year association with Barclays. But Mminele put an end to suggestions that he would be making broad changes in group strategy. He said his conversations with Absa’s board covered how the strategy was developed under former CEO Maria Ramos after Barclays’ decision to disinvest.
“I gained the impression that it involved a very thorough analysis of the operating environment and mega trends, and was co-created involving all levels of the organisation, so very consultative and participatory in nature. I am comfortable with the strategic choices Absa has made, and believe they match our growth ambitions,” he said.
Absa announced headline earnings growth of 1% for the year ending December 2019 to R16.3bn. Of its three core operating divisions, the Africa operations performed the best, delivering 16% growth to R3.6bn.
That strategy, which included rebranding the company, has seen Absa seek to recover market share in its traditionally dominant franchises, including home loans, card, and vehicle and asset finance.
Absa financial director Jason Quinn said the group was continuing to win a higher share of new loan volumes in the retail and business bank, putting the group’s share at 22%.
The implementation review Mminele would now oversee came two-and-a-half years after the strategy was implemented, and coincided with the culmination of the separation process from Barclays, which was on track to be completed at the end of June.
“We are now in a position to evaluate whether it is delivering the desired outcomes,” he said.
Changes in strategy if any might be induced by the new CEO’s reading of the deteriorating economy.
While the group forecast GDP growth of 0.9% for 2020, it expects to revise this down soon due to the arrival of Covid-19 in SA as well as declining business confidence.
The RMB/BER business confidence index released on Wednesday fell to 18 points in the first quarter of 2020, the lowest in 21 years.
Absa was the best-performing of the big four banks on Wednesday with its share price advancing 1.74% to R122.11 a share. It led FirstRand (0.04%), Nedbank (-0.65%) and Standard Bank (-2.63%).
22% is the Absa group’s share of new loan volumes in its retail and business bank