Category Archives: Banking in Africa

Old Mutual On the Rise and Reorganizing

old_mutual_2   Old Mutual (OML|LSE) has been around for a long, long time, but it is adapting to the times and it is a growth stock.

” The stock is up 111% over the past five years and has performed pretty well in recent months as well.”

They are going through a major “reorganization”, recognizing the growth of Africa and the emerging markets:

“This is particularly impressive given that it’s going through a major overhaul, which will see the business try to liberate value by splitting itself into four parts: Old Mutual Wealth, South African lender Nedbank, the South African Old Mutual Emerging Markets business and its US institutional asset management arm Old Mutual Asset Management. It has now exited all its continental European operations, ahead of a planned London flotation later this year. Reports suggest it may retreat from listing its UK wealth management arm, due to the mounting costs of upgrading its investment platform, and could opt for a sale instead.”

African Investment Report will continue to search out these types of companies. Be sure to subscribe on this page and get our FREE report and updates!

“These 2 solid income stocks merit a place in your portfolio”: http://money.aol.co.uk/2016/10/05/these-2-solid-income-stocks-merit-a-place-in-your-portfolio/

Standard Chartered Bank in New Drive to Expand in Africa

Gambia_Standard_Chartered_Bank_0001   Standard Chartered Bank (STAN|LSE; SCBFF|OTC MKT), which is based in the U.K. (as opposed to Standard Bank, which is headquartered in South Africa), has a new drive to expand in Africa.

“Contributing about 10 per cent of the Standard Chartered Group profitability, the African business supports over 1 million retail customers in Africa and over 25,000 commercial, corporate and institutional clients. The campaign has been launched barely four months since the Standard Chartered Group Chairman Sir John Peace visited Kenya during which he reiterated the Bank’s commitment to continue trading in Africa. Standard Chartered operates across in 38 African economies, 16 on a full-presence and 22 on a transactional basis.”

Hmm…This may be worth looking into…

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“StanChart in new drive to grow market share in Africa”: http://www.standardmedia.co.ke/business/article/2000214048/stanchart-in-new-drive-to-grow-market-share-in-africa

 

Standard Bank is Committed to Francophone Africa (Third in a Series)

standard bank   As we reported a couple of years ago, Standard Bank has as part of their growth strategy a commitment to move into francophone Africa. This continues to be the case, including their foray into Cote d’Ivoire:

” The pan-African lender plans to use the market as a gateway to expand across the francophone West Africa region.”

“The Standard Bank group, now in 20 African markets, aims to open its first branch in Abidjan by the end of the first quarter of 2017. According to Boyer, around 60% of the market share is held by five banks and there is potential for Standard Bank to introduce retail banking operations. However, he added the strategy is to grow slowly.”

“While South African companies have grown their African footprint across a number of English-speaking markets, they have typically been slower to expand to French-speaking countries – a result of challenges posed by the language barrier.”

But as we can see, this reluctance to go into francophone (and even lusophone) Africa,  is changing, and the prospects for growth are there for these South African companies, including the banks, and for you as an investor.

Find out where we’re going with these Africa investment ideas and concepts by signing up for our free newsletter! Sign up in the box to the right, and as a gift for doing so, get our FREE report: “How to Profit From Africa’s Growth Without Leaving Home”. So what are you waiting for?  Do it right now!

“Why Standard Bank is expanding to francophone West Africa”: http://www.howwemadeitinafrica.com/standard-bank-expanding-francophone-west-africa/55342/

Bank Expert Sees South African Banks as Solid (Second in a Series)

capitec bank   In this second post in our series concerning banking in Africa, let’s focus on South African banks.  This could be a great play on the growth of the rest of Africa, because most South African banks have as a large part of their strategy to expand in sub-Saharan and/or the rest of Africa, in commercial and/or retail banking.

We’ve discussed banking in Africa previously, for example here and here. While there are some analysts who believe that only one bank in South Africa is poised to do well, a bank ratings expert, headquartered in London, says that:

“Based on all of the banks we have rated so far, which are about 250 around the world, the South African banks as a whole are distinctly the best in the world. There is no two ways about it.”

Why?

I think it has to do with several things. First of all they score very well on the financial side of our ratings criteria – that’s stuff like capital, liquidity and all the financial ratios that are very important in assessing banks. But they also score very well on the so-called qualitative criteria, which is where we look at things like strategy, like culture, like living the brand promise. They’re actually extremely impressive banks – that’s taking the South Africa banks as a whole. We looked at the big five, including Capitec.”

We still need to do our “homework”.  They looked at the “big five” (Capitec (CPI|JSE), Barclays Africa (BGA|JSE), FirstRand (FANDY|OTC MKTS.; FSR|JSE), Standard Bank (SGBLY|OTC MKTS.; SBK|JSE), and Nedbank (NED|JSE)), but, to reiterate, he said that “…South African banks as a whole are distinctly the best in the world.”

Africa Investment Report owns shares in iShares MSCI South Africa, which has holdings (owns shares) in Standard Bank and FirstRand.

Find out where we’re going with these Africa investment ideas and concepts by signing up for our free newsletter! Sign up in the box to the right, and as a gift for doing so, get our FREE report: “How to Profit From Africa’s Growth Without Leaving Home”. So what are you waiting for?  Do it right now!

 

“Capitec, Barclays Africa and Atlas Mara: Thoughts From a Bank Ratings Expert”: http://www.howwemadeitinafrica.com/capitec-barclays-africa-atlas-mara-thoughts-bank-ratings-expert/55269/

 

 

Others Are Investing in African Banks – Are You? (First in a Series)

Bank of Africa   Several financial institutions, including the Dutch bank, Rabobank, have created Arise, to participate in deals in banks in Africa, including the Bank of Africa, a pan-African banking conglomerate.

“Arise sera opérationnel à partir du 1er janvier 2017.

Rabobank apportera ainsi ses parts dans Zambia National Commercial Bank (Zanaco, 66 agences, environ 1 million de clients et 330,7 millions de dollars de crédits), le tanzanien National Microfinance Bank (175 agences, plus de 2 millions de clients et un total de 1,1 milliard de dollars de crédits), le rwandaisBanque populaire du Rwanda (BPR – 192 agences, 626 000 clients et 159,6 millions de de dollars de crédits), le mozambicain Banco Terra BTM (9 agences, environ 28 000 clients et 47,4 millions de dollars de crédits) et l’ougandais DFCU Bank (45 agences, 256 000 clients et 247,5 millions de dollars de crédits).”

Translation:

“Arise will be operational from 1 January 2017.

As a result, Rabobank will bring its stake in Zambia National Commercial Bank (Zanaco, 66 branches, approximately 1 million customers and 330.7 million dollars in credits), the Tanzanian National Microfinance Bank (175 branches, more than 2 million customers and a total 1.1 billion in credits), the Rwandan Banque Populaire du Rwanda (BPR – 192 branches, 626,000 customers and 159.6 million dollars of credits), Mozambique’s Banco Terra BTM (9 agencies, 28 000 customers and 47.4 million of loans) and the Ugandan DFCU Bank (45 branches, 256,000 customers and $ 247.5 million of credits).”

These “investor groups” are investing in the long-term growth in Africa through its financial institutions that believe in its future.  In this series, we will discuss and look at banks you might want to invest in.

“Plusieurs prêteurs européens créent un holding d’investissement dans les banques subsahariennes” (“Several european lenders create a holding company to invest in sub-Saharan banks”):  http://www.jeuneafrique.com/346815/economie/plusieurs-preteurs-europeens-creent-holding-dinvestissement-banques-subsahariennes/

Emerging Foreign Investment Flows May Double: Time to Invest?

Money out of a plastic pipes    This could be the time to invest in emerging market countries, of which South Africa is one. (Some also mention Nigeria as an emerging market country, but it is still arguably a frontier market one.)

“Foreign investment in emerging markets should double this year to $550 billion compared to 2015, despite local selling pressure and Brexit, according to the Institute For International Finance.”

“In its July report,  the group explained its reasoning behind why emerging markets will remain attractive to foreign investors. Here are eight important assumptions from the institute’s lengthy report, and comments from the release on profitability and country exposure:

  1. Investors want yield and that is a key driver for emerging market capital flows.
  2. Brexit could intensify appetite for emerging market growth.
  3. EM economic growth is in a gradual cyclical recovery.
  4. The U.S. Fed is unlikely to produce hawkish policy surprises, which would draw investors to U.S. yields from EM yields.
  5. China is likely to avoid a disorderly movement in its currency, the renminbi, in order to keep short-term growth in line with its target, despite the resulting slowness in structural reform and high-and-rising debt levels.
  6. Brexit is likely to have a muted impact on emerging markets except those in Eastern Europe.
  7. Stabilization of commodity prices should benefit EMs, with oil prices to remain around the $45-50 per barrel in the third quarter.
  8. EM valuations are attractive.”

Many South African-based multinationals are already in and/or expanding into other parts of Africa.  This could be a good time to look at them. We’ll keep you posted!

8 Reasons Emerging Foreign Investment Flows May Double: http://blogs.barrons.com/emergingmarketsdaily/2016/07/14/8-reasons-emerging-foreign-investment-flows-may-double/2/

Time to Ring the Bell for Nigerian Stocks?

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The Hon. Yakubu Dogara, Speaker of the Nigerian House of Representatives, rang the closing bell for the Nigerian Stock Exchange (NSE) this past Friday. Leaders in the Nigerian legislature are pushing for reforms and innovations for the exchange.

“The Hon. Tajuddeen Yusuf (PDP, Kogi)-led House Committee on Capital Market and Institutions last month held a conference on the capital market and Nigeria’s economy in Abuja with a view to brainstorming on how to mainstream the market as a major driving force in repositioning the nation’s economy via initiatives that will enable ordinary Nigerians (to) key into opportunities available at the Exchange to increase their propensity for long term investment.”

This could be very positive for Nigerian stocks. There were other indications in a previous post that outlook for Nigerian stocks could improve.  We need to monitor NGE carefully.

“Dogara to Ring Closing Bell at Nigerian Stock Exchange” : http://thebossnewspapers.com/2016/07/08/dogara-to-ring-closing-bell-at-nigerian-stock-exchange/

Are Nigeria and the Rest of Africa Risky Bright Spots After Brexit?

brexit2     I owned the Global X MSCI Nigeria ETF (NGE) a while ago, but dumped it because there were all kinds of political problems there and the stock was going down fast. Maybe I should have held on, and I’m considering buying it again.

“And in Africa, the Global X MSCI Nigeria ETF (NGE) was among the few ETFs momentarily in the green. It was trading flat to higher after tumbling 14% over the past four weeks on Nigeria’s currency devaluation. The fund is shaping up to be the best performer of the week among developing market ETFs, with a rise of nearly 9%. If you bought the fund at the right time, that’s not so shabby.”

And maybe this speaks to Africa not suffering much or at all from Brexit, and that there are some stock-buying opportunities to come.

“3 Risky Bright Spots After Brexit: Gold Miners, Brazil Bank, Nigeria?”: http://blogs.barrons.com/emergingmarketsdaily/2016/06/24/3-risky-bright-spots-after-brexit-gold-miners-brazil-bank-nigeria/

Standard Bank’s Expansion Into French Africa Teaches Us About Africa’s Investment Growth Potential

标准银行总部 Standard Bank (SGBLY), a banking corporation based in South Africa, has discovered from its experience in the Ivory Coast, that there is plenty of growth potential in the francophone (French-speaking, culture, etc.) countries of Africa. In fact, this was termed to be “a strategic drive”.

This is one example of the fact that when we look at Africa’s investment potential, we cannot just consider the anglophone (English-speaking, culture, etc.) countries there.  There are the francophone and lusophone (Portuguese-speaking, culture, etc.), as well as the Arab countries, in Africa that merit consideration when it comes to investment, since many of them are growing, and businesses like Standard Bank are beginning to recognize that there are opportunities in different cultures.

Find out where we’re going with these Africa investment ideas and concepts by signing up for our free newsletter! Sign up in the box to the right, and as a gift for doing so, get our FREE report: “How to Profit From Africa’s Growth Without Leaving Home”. 

 

Barclays to Reduce Workforce Everywhere – Except Africa!

Barclays Africa Group Limited Barclays, the large bank based in Great Britain, has announced that it will reduce its workforce by 19,000 employees over the next three years in every part of the world that it’s in – except Africa!

Yes, you may have heard it here first, folks, at least in the English-speaking press, except for that of South Africa, where Barclays’ African operations are headquartered, that Barclays has no plans to reduce the workforce in Africa.  We first found out about it in the French press, while the aforementioned-English-speaking press, save for that of South Africa, focused on the drastic reduction in their investment banking business.  At least some are reporting that one of the core areas that Barclays will now focus on will be “banking in Africa”.

According to Agence Ecofin (the French press)Barclays Africa Group Limited was created as a result of the combination of Barclays Bank, Plc in Africa with the South Africa-Based bank Absa, Ltd.  They have 1,300 branches across the continent and offer a wide range of financial services, such as investment banking, retail banking, wealth management and finance.  For Barclays Africa Group Limited alone, there was a net profit increase of 20% in 2013 to $1.1 billion.  Its stock can be purchased in the United States over-the-counter as AGRPY.

Barclays Africa Group Limited Map  Find out where we’re going with these Africa investment ideas and concepts by signing up for our free newsletter! Sign up in the box to the right, and as a gift for doing so, get our FREE report: “How to Profit From Africa’s Growth Without Leaving Home”. So what are you waiting for?  Do it right now!