These are some of the findings contained in the Banking Association of South Africa (Basa) report on the transformation of the banking sector released yesterday.
Basa commissioned Intellidex, a leading South African capital markets and financial services research house to conduct the report that also considered the progress made between 2016 and 2017.
The report also aimed at drawing out the various ways the banking sector had worked to shift the wider economy.
It found the banking sector had reversed earlier gains, as empowerment deals matured, saying ownership measured by voting rights fell to 30.5 percent in 2017 from 34.8 percent in 2016, while black economic interest fell to 25.4 percent in 2017 from 30.3 percent in 2016. “Several empowerment deals matured in 2015, which has enabled black investors to realise gains and exit,” the report said.
As of the end of 2015, the banks’ empowerment deals had collectively generated R57billion of net value, Intellidex estimates. “Many have since sold their shares in order to diversify their wealth or invest in other assets,” said the report.
However, it said African Bank had increased black ownership from 11.2 percent in 2016 to 29.2 percent in 2017, while FirstRand and Grindrod reported marginally increased black ownership.
It said lending for empowerment transactions increased by 13.6 percent, for affordable housing by 26percent; for black agriculture by 20.6percent and transformational infrastructure by 7.6 percent.
“Unfortunately, lending to small and medium enterprises decreased (-7.7percent). Total industry lending at the end of 2017 was R3.35trillion, implying that targeted loans are now 7.3 percent of total loan books,” said the report. It also said that there had been more progress at junior levels relative to senior levels.
Banks employed about 158 000 people and had placed many black managers into their ranks, from 82 percent in 2016.
“Most notably, 84percent of the 54000 junior managers in the industry are black. The numbers of black senior managers, executives and directors, are all improving,” the report said.
In terms of the industry top brass, it said black executive directors now occupied key leadership roles in the largest banks, notably Lungisa Fuzile, Standard Bank chief executive and Basani Maluleke, African Bank chief executive.
It also said at board level, Nedbank was the most transformed with 11 black board members, of which five are women, out of a total of 18 board members. At FirstRand, 10 of 20 board members were black, five of which were women. Standard Bank group had six black board members of which three are women, with a board of 19. Absa was similar with six out of 18 board members being black, two of which are women. Investec has four black board members including two women, out of only seven board members.
“At senior executive level, FirstRand stands out with 18 black members. Standard Bank has seven black members, followed by Nedbank with six. Absa and Investec have five, while Capitec had two,” said the report.