South African top lender Absa said it has no plan to buy into any Nigerian bank but prefers to gradually build its presence in Africa's biggest economy, its CEO said.
Chief Executive Maria Ramos cleared the air on the lingering question over how it will execute its aggressive growth strategy.
According to Ramos, while Nigeria is a big and exciting banking market, it would build its presence there slowly and organically and did not plan to become a top lender.
“For us to be in the top three or four would mean us going out and acquiring a Nigerian business,” she said on Thursday. “The Nigerian banks are big and expensive and we wouldn’t be looking to do that.”
The World Bank in a report in 2017 put the figure of people who did not have a bank account in Nigeria at 60 million, that is about 30 percent of the country's population estimated at 200 million.
South Africa’s third-biggest lender had not previously been so explicit on its intentions in Nigeria, which is set to become a lively battleground in the fight for Africa’s banking market.
It has highlighted the country as key to its plan to double its share of banking revenues on the continent to 12 percent - one of a series of ambitious targets Absa has set as it tries to carve out a name for itself after separating from Britain’s Barclays in 2017.
On Thursday, however, Ramos was cooler on the potential in Nigeria, described by McKinsey last year as a “sleeping giant” where banking penetration is far lower than expected relative to income levels.
The market was “big and exciting” and remains important, she said, but Absa was concentrating on the “huge amount of opportunity” in its other markets outside South Africa.
While offering huge potential in financial services, which both lenders and African telecoms giants like MTN are looking for ways to tap, entering Nigeria has proven complicated for some foreign firms.
On Thursday, however, Ramos was cooler on the potential in Nigeria, described by McKinsey last year as a “sleeping giant” where banking penetration is far lower than expected relative to income levels.
The market was “big and exciting” and remains important, she said, but Absa was concentrating on the “huge amount of opportunity” in its other markets outside South Africa.
While offering huge potential in financial services, which both lenders and African telecoms giants like MTN are looking for ways to tap, entering Nigeria has proven complicated for some foreign firms.
Ramos also said Absa’s strategy elsewhere in Africa would be centred on organic growth rather than acquisitions.
“To go and acquire something has to make a huge amount of sense, it has to be value-accretive,” she said.
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