Competition for customers in the entry-level space is “alive and alive” according to FNB CEO Jacques Celliers. The bank now has 5.95 million eWallet customers – who hold no other products with the bank – and another six million middle-market retail customers who earn less than R37,500 per month.

TymeBank shareholder ARC Investments revealed this week that the digital start-up bank, which has a strong partnership with Pick n Pay, has passed the five million customer mark.

Shoprite said last month that it had “nearly two million” registered money market accounts. These are now full-fledged bank accounts and can make and receive payments. The account uses Grindrod Bank’s license and technology (earlier this year, African Bank announced that it would buy Grindrod Bank for R1.5 billion). Neither account charges a monthly fee.

Shoprite’s aggressive but stealthy move into this space signals that it sees a clear opportunity to build a deeper relationship with its customers. There is also a clear profit motive, as getting his clients to use the money market account means he doesn’t have to pay bank interchange fees like they do when using their credit cards. another bank.

The FNB Challenge

Celliers points out that the cost of acquiring customers in the entry-level segment is a “big problem”.

Its eWallet product has “a simple origination model” and provides it with good leverage in the segment.

The number of e-wallets (external to ETF clients) has increased by 6% over the past year. Additionally, there are an additional 1.65 million e-wallets owned by existing ETF customers. Traditional rivals with less mature tech stacks have had to catch up to compete in the space.

He admits that the bank “can do better in identifying quality in origination” and wants to use its ecosystem more to improve it.

For example, people who bank with FNB may have “downline” employees who are paid using eWallet. If the bank begins to better understand this relationship, it may grant a simple loan or offer a simple insurance policy to this person.

It will continue this approach of using a company’s wage float to fund e-wallets. This injects money into the system. This gives him enough runway to build a sustainable and rewarding proposition for this part of the market.

Celliers says it’s “very easy to get numbers, but not so easy to make money.”

In the premium or ‘private’ segment, the bank continues to gain market share, with customer growth of 8% to 1.73 million. In this part of its base, it increased deposits by 10% and advances by 8%.

He admits that there are still “underutilized credit opportunities” as well as “a lot of opportunities” in the family structure. It has pushed this hard in recent years as part of its eBucks rewards program. Celliers says the market has and will take “time to compete with us” in this space.


He is excited about the export potential of this private banking model in his other African operations where the “first market is under-resolved”. He says the bank will have “more effective leverage in smaller markets in particular” because it can use the platform it has built for its South African clients.

It now has retail clients who use an average of three of its products, with the investment and insurance units both active. Insurance revenues increased by 29%.

Annual results

FirstRand Group normalized profits for the year to the end of June 2022 are, at R32.7 billion, now firmly above pre-pandemic levels.

This is 17% above the 2019 peak (R27.9 billion). Before provisions, operating profit rose 6% from a year ago to R53.8 billion. These are also higher than the 2019 peak.

It says the group remains “cautious on origination, which has led to weaker year-over-year growth in advances versus the sector.”

In FNB, “there was stronger growth momentum in retail advances in the last quarter of the year, and that is expected to continue.” Its credit loss ratio was halved to 0.56% and it says “all portfolios are now at or below cycle levels.”

Deposits grew faster than advances, with the FNB’s retail business growing 9% and its commercial business growing 18%.

Its best-in-class return on equity of 20.6% is in the middle of its target range.

Read: FirstRand declares record dividend

It will pay its highest ever final dividend (185c per share), with the annual dividend up 30% to 342c.

It will also pay a special dividend of 125c per share.

In total, it will bring in R26.2 billion to shareholders.

Listen: FirstRand CEO Alan Pullinger discusses the results (read the transcript)

Listen: RMB chief James Formby describes the results of the exercise as he reflects on his exit (read transcript)