Battle Of The Banks : How SA’s Big Five Banks Compare

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Battle of the banks: how SA’s big five banks compare

The increase in the number of South African banks has seen these financial institutions battling for clients. South Africa boasts of many banks but among them are the top five namely Standard Group, ABSA, Nedbank, FNB and Capitec.

Comparing these banks is a bit challenging depending on a number of factors such as number of clients, types of services offered, investment opportunities, borrowing terms, number of shareholders and many other things.

Having said that, Standard Bank has proved to be the best though it doesn’t come out first in all the above factors. The bank has made headlines as the top bank in South Africa. Founded over 150 years of impeccable service. It offers different services and products, among the many services it offers to its clients are banking, borrowing in terms of loans, insuring their clients, investment opportunities and more importantly self-service banking. The bank has the most clients, the most branches and employs the most people – but it has a smaller market cap than FNB, and also slips behind the FNB owner in terms of headline earnings.

Looking beyond the ‘top two’ vying for number one, almost all of the big five banks in South Africa is leading by some metric.

Absa has the broadest ATM network and lowest P/E ratio – while Capitec has the highest headline earnings per share, and the highest share price. It offers different initiatives to the community from business solutions to community development activities. This makes it the second biggest bank in South Africa in terms of assets and investments. Its services are affordable to community.

According to recent financial reports (from 2016/17), the bank’s financial performance to network and reach, prove which bank is doing well. Below are some of the factors that were considered in the comparison.

Market capitalisation and P/E ratio

In terms market capitalisation terms, FNB is South Africa’s biggest bank with a capitalisation worth not more than R266 billion. Coming second is Standard Bank with R231 billion. Both banks carry a rational value with a price/earnings ratio that is relatively low – unlike Capitec, which carries a P/E of 25.

Finances

When it comes to finances, Standard Bank again takes the top prize, having drawn in just under R100 billion, compared to Absa’s R72.4 billion in its 2016 financial year, and FirstRand, which produced R71.8 billion in its financial year. It’s a different matter once more when looking at headline earnings, FirstRand again takes the top position, earning R22.4 billion. Standard Bank drew in the second highest at R2.1 billion. Despite Capitec’s ‘last place’ position on income and headline earnings, when it comes to headline earnings per share it takes the top spot.

Banking clients

When it comes to the number of clients, the report states that Standard Bank tops the rest outpacing other retail banks with around 11.8 million customers as at December 2016. Capitec comes in the second which is still considered to be the smallest of the big five – creeping up on Absa to take silver. As at December 2016, Absa reported a drop to 8.8 million customers in South Africa; at the same time Capitec was at 8.3 million. By the end of Capitec’s financial year (February 2017), this had increased to 8.6 million customers, continuing the massive reach the bank has gained over the past few years.

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