Absa customers down by 4.9%
ENTRY-LEVEL SEGMENT HIT: PRIVATE BANKING AND AFFLUENT SEGMENTS GROWING
Barclays Africa Group reports a decline of almost 300 000 customers with transactional accounts.
It said on Friday this decline was ‘mainly driven by bank-initiated closures of dormant accounts in the entry-level segments’.
Barclays Africa Group reported a decline of almost 300 000 customers with transactional accounts at its South African retail banking unit, Absa, over the past year. As at June 30 2017, it had 5.96 million “transactional” customers (2016: 6.25 million), down 4.9%.
This is the first time Barclays Africa has disclosed this metric along with its financial results.
Overall, SA customer numbers (retail and business banking) were down 3% to 9.286 million, despite “good growth in new-to-bank customers in target segments”. Between 2011 and 2013, Absa lost nearly 2 million customers, taking some big knocks with the loss of social grant-related accounts.
It is under pressure on practically all fronts in the retail segment. Its market share in home loans (measured by assets) declined one percentage point to 22%, while its card business underperformed in the store card portfolio (the Edcon book and Woolworths Financial Services joint venture). Its reduced risk appetite also saw market share in personal loans disbursements decline to 7.9% as at December 31, 2016 (end 2015: 9.9%), as per the National Credit Regulator.
Barclays Africa Group financial director Jason Quinn said: “We continue to lose share in mortgages, although we aim to increase our share of new business in the second half, without increasing our risk profile.”
Retail customers 8.6 million.
New account openings of the Pep Plus account, launched with Pepkor in 2014, were suspended earlier this year due to “elevated fraud levels”. Excluding this offering, it saw an increase in new-tobank customers.
New offerings such as MegaU fell 3% to for youth, a Gold Value Bundle and the Student Silver account showed positive initial results in the middle market and feeder streams, said Quinn. Private bank and affluent customer numbers grew 4% and 12% respectively.
The affluent segment is defined as customers earning over R300 000 a year: effectively the Absa Premium Banking product.
Total income in the transactional and deposits segment was up 4% to R6.144 billion. Noninterest income – such as fees – totalled R3.643billion in the six months from R3.558 billion a year ago (up by 2%).
The bank says: “Transactional income remained under pressure due to the planned migration of customers from branches to self-service and digital channels, the simplification of the product offering as a well as a lower customer base.
“The financial impact of the product simplification and transaction migration was approximately 4%.”
Absa’s Business Banking customer base also declined 4% to 352 000 (June 2016: 366 000).
Hilton Tarrant works at immedia