The latest DI900 data supplied by the South African Reserve Bank indicates that the large four banks are continuing to take market share from the smaller banks, says Efficient Group economist Nico Kelder.
First National Bank (FNB), he says, has been making the largest inroads in the credit-card market, claiming 4,9 percentage points over the past 12 months, now owning 47,8% of the non-individual credit-card market and 26,5% of the individual market.
Standard Bank still has the largest market share in the credit-card market, although it lost a large share of the non-individual market during October, from 23% to just 6,4%.
“The loss of market share of Nedbank has been slow but steady and it does not seem as if the bank can do anything to lure customers from the other banks,” says Kelder.
Absa is still the dominant player in the overdraft market, although it lost some market share from September to October. But Kelder says the loss in market share could be a one-off occurrence as Absa has “shown that they can defend their market share”.
“It seems as if Nedbank has halted their slide in market share as they gained 0,4 percentage points from September. Nedbank was the second-largest player as recent as May when it held 18,8% of the total overdraft market.
“Despite losing significant portions of their market share in the credit-card and overdraft market, Nedbank has managed to make significant inroads on the other-loan credit. There is no clear dominant player in the other-loan segment as one sees in the credit-card and overdraft segments.”
The mortgage market is still being dominated by Absa, although FNB is challenging this position, making larger inroads than Absa, according to Kelder.
“The major loser is Nedbank, as it just cannot compete with the likes of Absa and FNB.
“FNB holds the smallest share of the four major banks but is clearly putting an effort in to close the gap to the large players. As Standard Bank securitised R4-billion of their home-loan book, their drop of only 0,4 percentage points indicates that they are still strong players in the mortgage market.
“In the instalment market, FNB is still managing to increase their market share as Absa and Standard Bank is attempting to keep their slice of the cake. The continued success of FNB to increase their market share is most likely a result of their dedicated vehicle-finance arm increasing the focus of this department. Absa’s vehicle-finance arm is clearly not as effective as its FNB counterpart.
“The king of the leasing market is undeniably FNB, holding almost 50% of the total market, having gained six percentage points over the past 12 months. Most of the market-share gain of FNB has been to the detriment of Nedbank and Standard Bank, while Absa has managed to increase their share. The other banks need to reconsider their strategy in this credit segment as FNB seems to have the almost perfect strategy.
“With FNB making the largest gains in all but two of the credit segments, it is unsurprising that they made the largest gain in the overall credit market. The only credit segment where FNB lost market share over the past 12 months was in the other-loan segment, where they dropped 0,1 percentage points. This can for all practical purposes be ignored.
“With the current growth in market share of FNB, it won’t be too long before they move into the second-largest credit lender position, currently being held by Standard Bank.
“The money that FNB is borrowing to their clients is not covered by their deposits. This shortfall between their assets (loans extended) and liabilities (deposits held) is being borrowed from the likes of Standard Bank and Nedbank, whose liabilities are more than their assets.
“FNB might need to look at their deposit-taking capabilities, as the cost of borrowing from depositors is usually less than to borrow from fellow banks.” — I-Net Bridge