Standard Bank is looking to expand in Nigeria and Kenya.

Standard Bank is looking for acquisitions in Nigeria and Kenya as the continent’s largest lender by assets expands its presence in key markets.

Standard Bank Chief Executive Officer Sim Tshabalala stated that the lender is also looking to expand its operations in Ethiopia, where it has a representative office, and in its home market of South Africa. “If there was an appropriate priced asset with acceptable risk, we would definitely look at acquiring,” he said of Nigeria and Kenya. In 2007, Standard Bank paid $400 million to acquire control of its Nigerian subsidiary.

Expansion in the continent’s largest economies is part of a strategy to combat rising competition and tap African firms growing within the region. There is also the possibility of increased business as the African Continental Free Trade Area, the world’s largest regional trade arrangement in terms of membership and population, gradually takes root.

In an interview in Bloomberg’s Johannesburg office,Tshabalala said, “Unlike five to 10 years ago, there are a number of African multinationals, who have got regional strategies, as well as international multinationals who are operating in countries where we don’t operate in”. “They want us to provide them a service, which forces us to think outside the existing network,” such as in Ivory Coast, Morocco, and Egypt.

In Nigeria, Stanbic IBTC Holdings Plc, which operates a corporate and investment bank, reported a 38% increase in profit for the six months ending June 30, the largest increase since 2018. 

Tshabalala stated that Standard Bank wants the unit, which has 140 branches, to expand in Africa’s most populous country without jeopardising its “strong returns” in the country.

Ethiopia, Kenya

Ethiopia, the continent’s second-largest country by population, presents a similar opportunity, he says. According to the CEO, Standard Bank also intends to expand its mid-sized business in the highly competitive Kenyan market.

The earnings outlook for Standard Bank has improved, and “stronger backdrop allows the lender to focus on building exposure in higher-growth pan-African regions,” said Bloomberg Intelligence analyst Philip Richards. It has “excess capital, which can be put to use for acquisitions or investments to grow in external markets across Africa,” he stated.

Companies have still struggled with supply-chain disruptions and repatriating funds from Nigeria, where foreign exchange is rationed. Shoprite, Africa’s largest food retailer, exited the West African country last year, joining other South African companies such as Woolworths, Truworths, and Mr Price.

Nigeria’s economy has also experienced two recessions in the last six years, as well as soaring inflation that has reached a 17-year high. Meanwhile, in Ethiopia’s Tigray region, there is ongoing unrest and fighting.

The lender is concerned about South Africa being added to the global illicit-finance watchlist, which would raise the cost of capital in the country. The Financial Action Task Force, based in Paris, has asked Africa’s most industrialised economy to demonstrate that it has a credible plan to address its shortcomings.

Tightening legislation and ensuring financial crimes are investigated and prosecuted were among the necessary measures.

A lobbying group, Business Leadership South Africa, estimates that the country will be added to the so-called grey list in February. Tshabalala, on the other hand, claims that the odds are improving.

Tshabalala stated, “Given the effort that has gone into it, the probabilities are now balanced.”

“It’s still touch-and-go, but I think 85% probability is high.”

Standard Bank’s South Africa Goals:

• Boost market share for deposits
• Increase unsecured lending
• Grow mass-market life insurance business
• Bolster vehicle finance unit