While 65 percent of all middle managers in banking were black, surpassing the number of white middle managers for the first time in 2019, according to an Intellidex report, more needed to be done to reflect the demographics of the country, BASA said yesterday. Photo: REUTERS/Mike Hutchings
While 65 percent of all middle managers in banking were black, surpassing the number of white middle managers for the first time in 2019, according to an Intellidex report, more needed to be done to reflect the demographics of the country, BASA said yesterday. Photo: REUTERS/Mike Hutchings

SA’s banking sector is making some strides despite tough conditions

By Sandile Mchunu Time of article published Apr 30, 2021

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DURBAN - WHILE 65 percent of all middle managers in banking were black, surpassing the number of white middle managers for the first time in 2019, according to the 2020 Transformation in Banking Report, more needed to be done to reflect the demographics of the country, Banking Association South Africa (Basa) said yesterday.

Basa said the report – produced by independent research company Intellidex, with statistics provided by the banks – reflected the progress made by banks in transforming the industry and increasing economic inclusiveness and empowerment despite the constrained economic conditions. The percentage of board directors who were black reached 44 percent in 2019.

“These industry figures were achieved despite the difficult economic and business conditions that South African banks and companies have had to endure during the past four years. This has made it more challenging to fast-track the achievement of the Financial Sector Code (FSC) goals, which depends on growth in targeted lending and employment opportunities,” Basa said.

However, the report comes after one of South Africa’s big banks, the Absa Group, lost its first black chief executive, Daniel Mminele, last week through a difference of opinion on the strategy the bank was adopting.

Despite the strides made by the sector, total empowerment financing dropped by 19.5 percent to R203.7 billion in 2019. However, spending on black consumer education – particularly important for financial inclusion and literacy – climbed by 18 percent to R212 million in 2019 compared to a year earlier.

Another notable achievement was a 38 percent increase to R1.1bn in supplier development spending.

The banks’ exposure to black economic empowerment deals declined by 35 percent to R107bn in 2019.

The banks’ black ownership measures have declined in the past four years, with the report stating it was a result of black shareholders realising value by selling shares and diversifying their investments away from banks.

“However, on aggregate, black ownership remains above the FSC target of 25 percent. The transformation of the banking industry must be done in a sustainable manner that allows it to continue providing appropriate financial services and support for inclusive economic growth,” the report said.

The banks’ spending on socio-economic development dropped by 8 percent to R621m in 2019. “Economic distress limits the banks’ profit growth, which curbs the amount allocated to socio-economic development support, which is based on net profit after tax. The financial services industry paid 36 percent of all corporate tax, R122bn, in 2019,” it said.

The report comes as members of the movement RacistBanksMustFall took to the streets of Joburg yesterday to march against “racist” banks and some of their decisions, which the movement felt were disadvantageous towards black people and their businesses.

The convener of the march, Adil Nchabeleng, said: “Banks have been racially selective in providing the R200bn in Covid-19 relief funds. Many black businesses had to close because they did not receive the funds. We are tired of these banks,” he said.

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