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Retail Banking
South Africa

Retail Banking South Africa offers a comprehensive suite of retail banking products and services to individuals and provides asset finance to commercial customers. We cater for the full spectrum of customers, from those needing basic banking services to those requiring sophisticated financial solutions. Our focus is on providing a consistently superior experience across each of the channels, matched closely to the needs and expectations of each customer segment. Customers are served through an extensive branch and self-service terminal network, electronic and mobile channels, relationship managers as well as call centre agents.

This is a summary extract from our segment performance reporting. For the full segmental analysis, see our 2015 financial results booklet.


  • Headline earnings grew 16% to R6 628m (2014: R5 733m) due to positive Jaws and lower credit impairments.
  • Non-interest income growth of 5% on the back of increased transactional activity and growth in customer numbers.
  • Net interest income increased with 6%, following deposit growth of 10% and improved pricing on new loans.
  • Credit impairments declined 2% to R4 769m (2014: R4 848m), with the credit loss ratio improving to 1.28% (2014: 1.33%).
  • Low cost growth of 3% is attributed to benefits from the multi‑channel programme and focused cost management.
  • Business production levels continue to increase across most key portfolios, with the exception of Vehicle and Asset Finance.
  • Customer numbers increased to 8.8 million (2014: 8.6 million) through improved acquisition of new customers and reduced account closures.
  • Edcon recorded headline earnings of R123m (2014: R9m loss), largely as a result of focused long-term credit risk management strategies.


  • Subdued growth in loans and advances of 2% was impacted by lower balances in Edcon and high book run-off in Home Loans.
  • Non-interest revenue was negatively impacted by reduced interchange rates and customer migration to lower-cost digital channels.
  • Declining market share across the portfolio, despite new production growth in Home Loans and Personal Loans.

Operating environment

The following factors had a key influence during the year:

  • Consumer finances remained under pressure as growth in employment, real household disposable income and consumer expenditure declined further. The increase in income tax rates has further eroded disposable income levels, particularly in the affluent customer segments.
  • Consumer credit risk profiles did not show significant improvement, impacting access to credit. Consumers remained heavily indebted with the ratio of household debt to disposable income above 78%.
  • Consumer price inflation remained within the inflation target range, but started to increase in late 2015 as a result of the impact of the drought on food prices. Interest rates were increased by 25 basis points in July and a further 25 basis points in November, impacting the cost and affordability of credit.
  • Growth in household credit extension remained relatively low at 4.6% across the secured and unsecured advances portfolio and total new vehicle sales volumes declined by 4.1%.

Business performance

Growth in key segments indicates that our segment turnaround strategy is yielding both customer retention and attrition benefits. Our focus on engaging with and meeting the financial needs of our customers, coupled with our wide range of offerings, has enabled us to extract additional revenue from the high-value segments.

Our financial performance improvement was underpinned by the investment initiatives in digitisation, innovation, the branch and ATM networks improvements as well as investing in our employees. Our focus has been on improving our customers’ and clients’ experience, offering alternative and improved ways for our customers to interact with us and providing them with products and services that meet their evolving needs.

The risk profile of new business remains well within business risk appetite and is appropriately priced. Impairment levels have improved as a result of strong risk management initiatives, including the introduction of new affordability assessments and the continued enhancement of collections and recovery processes.

Strong cost management discipline has enabled us to continue investing in our turnaround programme, including targeted marketing initiatives, and this will remain a key focus to realise benefits arising from the customer adoption of more convenient and cost-effective banking channels.

Looking ahead

Our turnaround journey remains on track. There is a sustained real customer growth in key segments and client attrition has slowed, customer service is improving, our market share of voice is beginning to be felt and our cost and credit losses are well contained. A detailed series of plans and initiatives are in place to leverage and expand the platforms laid with an emphasis on:

  • effective customer engagement informed by customer insights and data analytics;
  • introduction of innovative products based on specific customer needs and simplified and transparent pricing;
  • responsible provision of credit and maintenance of a responsible risk appetite;
  • ongoing digitisation and process improvements; and
  • improved access through new and existing channels.