A week after delivering a set of results that exceeded market expectations, it is reasonable to expect Standard Bank Group CEO Jacko Maree to be taking things easy. Not so. This unassuming, disarmingly reserved veteran banker, shy to a point of appearing intimidated, is preparing to meet his eclectic mix of shareholders.
The biggest are Old Mutual, parent to rival Nedcor, which holds 12,2%. Then there is transformation enforcer Public Investment Commissioners, which holds 11,6%. The Tutuwa Consortium, which bought into the group as an empowerment partner last year, now holds 7,6%. The group is 20% held by foreigners.
The shareholders will have very little to complain about. They have just been rewarded with earnings of 566 cents a share, up 20,3% from 2003, and a dividend of 231 cents, up 53%.
The results, as reflected by insurers and banks during the past few reporting seasons, continue to be driven by low interest rates, low inflation and runaway consumer spending — now with the added dimension of the black middle class, which rewards Standard Bank in various ways.
Standard Bank subsidiary Stanlib, the country’s largest unit trust company, reported last week that it attracted 60% of all funds channelled into unit trusts during the last quarter of last year. Truman Zuma, Stanlib’s head of unit trusts, attributes this performance to ”the savings of black families, black professionals and business owners”.
Maree says that in his 25-year career he has never seen the kind of consumer spending we are seeing now.
”It can go one of two ways,” he says of the spending boom. ”It can either fizzle out” as a result of a rapid interest rate increase or, as he and the bank hope, it can spill over into a business and investment boom — then the good times can really roll.
The financial sector pins its hopes on the government’s infrastructure spending plan materialising. This would help the corporate banking division (which contributed 35% to last year’s earnings) to overtake retail, the star of last year’s show with 41%.
Meanwhile, the group’s acquisition-driven move into Africa continues under the guidance of the suave and highly regarded Standard Bank Africa MD Sim Tshabalala. This year it brought in R634-million, or 8% of earnings, a figure that is slightly compromised by the strong rand.
The road ahead sounds like an energy-sapping slog. Maree sees the challenge on the continent as being to grow presence in countries such as Nigeria, Ghana, Kenya and Tanzania, while looking to break into markets such as Angola.
An example often given by Tshabalala’s deputy, Greg Brackenridge, to illustrate the entrepreneurial dynamic in African countries where the formal sector is relatively underdeveloped, is of the road that stretches from Entebbe airport in Uganda to the capital Kampala. The 20km stretch is lined, well into the night, by small-scale business people ranging from welders to shoe repairers.
It would be interesting to know how many of those entrepreneurs Standard Bank actually helps to establish or grow their enterprises.
Maree answers by noting that ”retail banking on the continent is difficult”. As an example he points out how sometimes laws make it difficult to repossess an item. For now, he says, the bank offers basic transaction services.
In Uganda, it has 37 000 small business accounts, with R41-million in deposits, or 6% of its own deposits.
More importantly, one wonders, if South African banks are accused of being conservative, are they not exporting this ethos to the continent?
”Banks have to be conservative, or maybe prudent,” Maree says, pointing out how a banking sector crisis triggers an economic crisis. ”What we export to the continent is what we have learnt, and that is how to run a bank.”
Maree believes that the lessons that Standard Bank will learn from low-income housing provision and the Financial Services Charter can be valuable to the rest of the continent.
The charter represents one of the highlights of his career and he believes that the strong position of the big banks’ healthy balance sheets makes the sector well positioned to meet charter commitments.
Maree was recognised for his role in helping draft the charter by being named Business Times business leader of the year.
What he finds most gratifying about the drafting process of the Financial Services Charter is that it has elevated transformation issues to a higher level on the financial services sector agenda. As a result, every Monday, he chairs transformation committee meetings that focus on various facets of the charter.
From a ”personal view” Maree believes that employment equity is the most important pillar of the charter ”because it is the one that lasts” long after ownership has matured.
Standard Bank has one-third black representation at management level out of a staff complement of 6 000.
Maree appears comfortable in the job he accepted five years ago. He was brought in to fend off a takeover bid by Nedcor. He has now grown the bank to a point where it seems too big to buy.
At almost R90-billion market capitalisation and this week’s rand/dollar exchange rate of R6, Standard Bank would cost about $15-billion, excluding a hefty premium — a considerable amount for an emerging-market bank.
Maree, however, reiterates the bank’s stance that ”[it] does not need, and is not seeking a foreign partner”, without dismissing the theoretical, but unlikely, possibility that a foreign party could make an offer to the bank’s splintered shareholding who might then decide to sell.
So how long will it be before Standard Bank has a black CEO?
”That is not my job,” he says. ”My job is to present candidates to the board, and they can’t all be white, then they will decide.”
Maree notes with pride that when the time comes the board will comprise black people of the calibre of deputy chairperson Saki Macozoma, Cyril Ramaphosa and Eskom CEO Thulani Gcabashe, ”who will offer much more robust debate than we otherwise would have”. Most importantly, he believes, ”they will make the right decision at the time” and ”appoint the best candidate, black or white, on merit”.