Absa targets African expansion as lenders seek growth beyond South Africa

Absa Group is accelerating expansion across Africa as the region outside the bank’s home country becomes its top growth driver, even as South Africa remains its largest market, CEO Kenny Fihla said on Tuesday. South African banks are stepping up acquisitions in East Africa, viewed as a trade corridor linking Africa with the Middle East, India, and Asia, as European banks retreat from the continent, creating a vacuum regional players are racing to fill. In October, Standard Chartered agreed to sell its wealth and retail banking business in Uganda to Absa, South Africa’s third-biggest lender by assets.

Earlier, Absa posted a 12.25% rise in full-year headline earnings to 24.7 billion rand ($1.51 billion), as the corporate and investment banking, as well as rest-of-Africa units, reported growth. Fihla told Reuters that Absa’s revenue and earnings in the rest of Africa remain heavily concentrated in Ghana and Kenya, but the group sees significant room for growth in Uganda, Tanzania and Zambia. Scaling will involve strengthening the group’s balance sheet in order to expand through a mix of acquisitions and organic growth, improving group-wide coordination and raising service quality to attract new clients, Fihla said.

“There is no doubt that the African region presents the biggest growth opportunities,” he said. Zambia has become increasingly important to lenders due to its global importance in copper production and its growing portfolio of critical minerals essential for electrification and clean-energy technologies. Absa is also beefing up top brass to manage its Africa-wide business, with the head of personal and private banking expected to start in April.

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It is finalising the appointment of an executive to lead the pan-African business banking unit, Fihla said. Fihla believes that Absa is better positioned than some rivals to capture East Africa’s growth as it already has an established presence in the region that boasts stronger economic growth than other regions and a favourable regulatory environment. “If you do not have a presence, it becomes extremely difficult to take advantage of these opportunities. We already have that and therefore should be at a slight advantage…to capitalize on these opportunities,” he added.

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