Standard Chartered, the United Kingdom-based bank with an emerging market focus, is betting on Africa, particularly Nigeria, to drive growth for the next decade.
Standard Chartered will double its branch network in Nigeria in the next two to three years, up from 36 branches now, according to Stephen Atkinson, group head, Corporate Affairs, Standard Chartered Bank, who was on his first trip to Nigeria last week.
The bank’s African business, he said, is growing fast with eight markets earning over $100 million in revenue for 2012 and three of those, including Nigeria, earning over $200 million in revenue.
“Ten years ago we made $21 million in revenues here, but we are now well over $250 million in revenues,” Atkinson said in an interview with BusinessDay. “We are looking to get bigger in Nigeria, it is clearly a growth market for us, and it is our largest African business.”
The bank’s Nigerian revenues rose by 1,100 percent in the past 10 years as the Nigerian economy expanded fourfold to $274 billion in 2012 from $65.7 billion in 2003, with an average GDP growth rate of 7.46 percent per annum for the period.
Standard Chartered’s income from Africa, Atkinson said, rose 15 percent last year to $1.59 billion, with 10 countries posting growth of more than 10 percent, including Kenya, which gained 34 percent, South Africa, which rose 28 percent, Ghana, which grew at 20 percent, and Nigeria, which grew at 13 percent. Revenue from Africa made up more than 8 percent of income last year. For Nigeria, 80 percent of revenue comes from wholesale banking while 20 percent comes from retail, he said.
Standard Chartered, with operations in 16 African countries, plans to invest $100 million over the next three years opening 110 branches on the continent and recruiting 950 consumer-banking staff. The bank currently has 900 staff in Nigeria, and over 500 of them are on the retail side. “That gives you an idea of our commitment to grow that segment of our business,” he said.
Atkinson added that the bank, which has 7,500 SME customers in Nigeria, is not too concerned about competition coming from other established banks in the country.
“The benefits to Nigeria of a bank like us are to be able to bring in our international network and other specialised expertise. There is no point in us coming here to recreate what the local banks are doing,” he said, adding that the bank plans to double revenue at its African business in the next 4-5 years.
The lender, which gets most of its profit from Asia, has been expanding in Africa, India and China, whose economies are outpacing many developed nations. The bank is trying to attain revenue growth of at least 10 percent, while keeping expenses under control as it hires and adds branches in Africa.
“We like to be disciplined with our cost management so that we can keep investing in the franchise,” Atkinson said, while also maintaining that the bank overall is extremely well capitalised and the liquidity position is very strong with loan to deposit ratio at 74 percent.
Standard Chartered said, March 5, that pretax profit for 2012 gained to $6.88 billion, and revenues increased 8 percent to $19.1 billion. The stock has gained 13 percent this year, valuing the bank at about 42.6 billion pounds ($65 billion) at Friday’s close in London.
PATRICK ATUANYA
