Middle East, Africa key for growth
Keeping lid on costs, the bank took a counter-cyclical view and invested in Africa
Middle East and Africa region has some of the high growth markets for Standard Chartered and these will contribute significantly to future income growth of the global bank, Bill Winters, Chief Executive Officer of the bank told Gulf News.
“This region is our strongest performing region with substantial improvements in loan impairments we see beginnings of some good signs of income growth, cost efficiencies and improving returns. Dubai is our regional hub for our Africa and Middle East region. We are not only committed to this region, but investing heavily in the region,” Winters said.
Africa and Middle East markets were particularly challenged in recent years, given both the regions are heavily dependent on natural resources. “We started 2016 very much aware of the fact that the next two years would be particularly challenging. The problem was also exacerbated with the currency fluctuations in Africa,” said Sunil Kaushal, Regional CEO, Africa & Middle East, Standard Chartered.
In the region, the bank took a conscious decision to control costs and went after efficiencies. “While keeping a lid on costs we took a counter-cyclical view and invested in Africa when many of our competitors are pulling out. It was well received by all our stakeholders, including as regulators, customers, governments and staff. We also continued to invest in key markets in the Middle East last year. Overall, Africa and Middle East had a very strong performance last year,” said Kaushal.
In the Middle East, it was more about getting the basics right, such as strengthening the balance sheet and cleaning up the portfolios. The bank does not expect to see any runaway growth in revenues in the region in the current economic climate but we are confident about meeting profit targets.
“In the previous cycle when the going was good we were building on higher risks and when things slowed down we paid a price in terms of loan impairments and loss in efficiencies. We are doing exactly the opposite in this upturn. We have got tighter underwriting standards and far greater efficiencies in the cost base. Hopefully the outcome will be a lot different and better,” said Kaushal.
Taking the lead
The Africa and Middle East region is taking the lead in the ambitious technology transformation initiative which Winters expects to bring great efficiencies, cost savings and boost return on investments.
“What Sunil and his team are doing here is what we would like to replicate globally. Our objective is to have a world class global mobile banking and digital banking platform. We are making the investments to get there,” said Winters.
In digital initiatives, the bank is taking an experimental approach in the region which, it expects to roll out in many markets across Africa, Middle East, Asia and South Asia. In Cote d’Ivoire (Ivory Coast) the bank is setting up a pure digital bank targeted to complement or reduce its dependence on physical branches.
“What we are doing in Cote d’Ivoire could become a template. It is an experimental platform for a full digital bank. We will experiment there, learn and roll out into other markets in the region and globally in next 9 to 12 months,” said Winters.