Growing in leaps and bounds
In three years, assets under management doubled to R600bn and are still growing
The holy grail of banking is noninterest income earned from asset management, commissions and services that make no claim on the balance sheet. It allows a bank to grow revenue and earnings without having to grow capital.
In Absa’s case, the ratio of net interest to noninterest income is about 60:40. Noninterest income was as high as 45% five years ago when lending growth was more restrained. One way of generating non-interest income is through wealth, investment management and insurance sales. Nomkhita Nqweni is CEO of Absa’s Wealth, Investment Management & Insurance (WIMI) business, having joined the bank after 14 years as head of Alexander Forbes Panafrican financial services. In three years, assets under management have doubled to R600bn, and
WIMI now contributes 7% to group headline earnings.
Under Nqweni’s guidance, WIMI’S growth story has gained pace. For example, the Property Equity Fund has grown from R250m to R7bn and won the Raging Bull award eight times.
Absa’s multimanager funds have expanded from R6bn to R40bn in four years. A third of the bank’s unit trusts perform in the upper quartile. The private client portfolio outperforms the benchmark by almost 9%. Another area of growth is Absa’s suite of alternative investment products, such as inflationlinked and guaranteed funds, popular among pension funds seeking protection from volatile markets.
The investment market has changed radically since 2008, when beating the market was the best game in town. Now the game is protecting capital and beating inflation. WIMI will have a distinctly pan-african feel.
“We have a large client base across the African continent, and it’s our job to offer them an integrated financial solution,” says Nqweni. “The kind of services and products available to our SA clients will in future be extended to the rest of our African clients.”