Youthful populations and less financialized economies mean African banks do not face the prospect of decline in the same way as their peers elsewhere in the world.
There is good growth in corporate and investment banking, too, as the financial needs of African clients are proliferating.
Partly because of this, Standard Bank – the continent’s biggest lender by assets – made almost twice as much money in corporate and investment banking in the rest of Africa than in South Africa last year.
Yet the question of how much emphasis to put on long-term growth over risk-adjusted profit is not an easy one in Africa. Indeed, there is a sense that this dilemma ultimately underlies the controversy around the exit of former Absa CEO Daniel Mminele this year.
The past few years have laid bare African banks’ vulnerability to regulatory risks
Absa’s separation from Barclays had tentatively coincided with a shift in power towards business divisions rather than control functions and – as at Standard Bank – a better recognition of the pan-African opportunity.
The reality is that banks have a starkly different set of risks and regulatory constraints to deal with than other sectors, such as technology – even where growth prospects are relatively good.
