Move will open opportunities of growing African market to UK and European investors

Today, Absa, one of Africa’s largest diversified financial services groups, launches their UK office. Officially trading as Absa Securities UK, the move supports the group’s ambition to bring the world to Africa as the preferred corporate & investment banking partner between UK and European investors looking to do business in the continent’s growing economies.

The launch also represents a key milestone in Absa’s journey to becoming a true, standalone universal African bank following its official separation from Barclays on 30 June. Formerly Barclays Group Africa, the newly independent Absa draws on a 100-year heritage, with offices in 12 countries and has recently announced plans to expand their international presence throughout the major trading corridors into Africa which include North America and Asia.

Opening in the UK is a key pillar of that strategy, and comes at an opportune time as UK and European investors and businesses look to an increasingly stable and prosperous Africa for opportunity in a post-Brexit environment.

Absa’s goal is to help UK businesses expand into, and successfully do business in Africa. To confidently navigate relatively unfamiliar territory requires a partner with a long-history and established operations across the continent. That partner is Absa.

Absa brings a thorough understanding of investment flows, market participants, sector trends and regulations everywhere it operates. Headed by CJ Giddy, the UK office will give access to that expertise along with services including: liquidity management, cash management, trade & working capital, risk management, card issuing and acquiring and investment banking.

Absa Group CEO, Maria Ramos said: “We have an ambitious growth strategy at the centre of which is the growth of our clients. Having made the strategic commitment to grow in Africa we are also focused on investing in the infrastructure and capacity we need to help our global clients maximize their own growth potential in Africa. Our UK office is an important component of our growth intentions and we are delighted to introduce it to our clients at this time.”

In July, Barclays Africa Group Limited officially started trading under its new name, Absa Group Limited, on the Johannesburg Stock Exchange. Absa already has a number of key corporate and investment banking client relationships across Europe, North America, and Asia. In Africa Absa offers personal and business banking, corporate and investment banking, wealth management, investment management and insurance services.

Much has been said about the African growth story and the opportunity our continent presents. But the role of financial institutions in securing that growth cannot be underplayed. As a corporate and investment bank in and for Africa, we operate in the knowledge that what we do can drive rapid economic growth and human development, a necessary precursor for addressing some of the continent’s most critical development issues.

Corporate and Investment Banks are uniquely positioned to support development by the very nature of the work they do in developing market economies. We appreciate the opportunities we have in order to make a valuable contribution to the continent’s development, and therefore have to consider very carefully where we deploy our capital and resources.

But what does the continent need to thrive and where can we participate to enable the most meaningful impact?

Of course there are binding constraints to growth and development in Africa. Financial systems and inclusion are underdeveloped in many countries and institutional capacity and governance continues to mature. Increased regional economic integration bodes well for progress in financial sector development, regulatory oversight, technological advancement and the implementation of growth friendly policies.

The launch of the Absa AFM Index which measures the level of development of the financial markets in Africa based on a comparison of 17 countries is one of the steps we have taken to assist in market development and transparency.

The index was launched alongside the IMF meetings in October 2017. Subsequently, it was also launched in various African countries to promote the index locally and also get buy in from local stakeholders. The countries are ranked according to a number of measures, ranging from market depth, regulatory environment to legality and enforceability of agreements, with the objective of focusing the attention of policy makers on structural reforms needed to transform and accelerate the development of the various financial markets.

Market players and stakeholders also see the index as a useful tool that is being used to drive discussions and accelerate reforms in the financial markets in a manner that is structured with a uniquely African lens. The benefits of developing African financial market include the potential reduction of the cost of borrowing and the ability to mobilize capital efficiently.

Supporting economic growth is a critical contribution we believe we can make.

An enormous infrastructure gap makes progress very challenging and as such helping to build the infrastructure required to fuel economic growth is a critical contribution we believe we can make. The provision of electricity generation capacity, can stimulate far-reaching economic growth while providing viable bankable projects for investors. The recent material reduction in the cost of renewable energy makes this form of power even more relevant for the African continent, where affordability remains a key challenge for the many power utilities on the continent.

Financing for renewable energy projects is an important focus area for Absa CIB, not only from a pure debt financing perspective, but also from an economic development perspective. Absa CIB has become a major player in the field as the institutional funding market of such projects has evolved in recent years. In total we have secured debt financing worth R50 billion for 33 renewable energy projects as part of the South African Department of Energy’s latest bidding round under the renewable energy independent power producer programme (REIPPP). These projects, comprising of wind, solar and biomass projects, will add a combined 2900MW to the national grid.

The challenge is now to look beyond South Africa, with interest coming from countries such as Ghana, Zambia, Kenya and Tanzania. The reduction of costs in renewable energy provides many opportunities for investors.

There is boundless potential

The sheer scale of investment banking activity over the last decade across the continent reflects the material potential. With more than $100 trillion in assets managed by institutional investors and commercial banks globally, interest from international institutional investors is not waning, requiring the vast array of services from commercial banking, advisory services, mergers and acquisitions and capital raising.

In recent years African equity markets have seen limited capital raising and against this backdrop, the Vodacom Tanzania IPO in November 2017 stands out as a landmark and transformational transaction, raising capital from domestic and international investors. We were privileged to play an advisory role in helping Vodacom Group on the successful IPO of Vodacom Tanzania on the Dar es Salaam Stock Exchange in 2017. At USD 213 million, the Vodacom Tanzania IPO was the fourth largest in Sub-Saharan Africa outside South Africa since 2008 and in excess of 40 000 local investors participated in the offer, many of whom were first time participants in the capital markets. The need for financial inclusion is an obvious requirement for economies to prosper, and to drive investment flow. African countries have an array of options, beyond domestic resources and foreign aid, to support their investments.

There can be no doubt of the transformative power of banking to contribute meaningfully in improving the lives of people, the prospects of institutions and the efficiency of government delivery. In many ways, Africa will lead the rest in banking innovation because it defies the traditional banking models.

We believe that with the bravery to imagine and the will to get things to done, we can help chart the course towards realising possibilities for the continent we serve.

By Mike Harvey and Temi Ofong, Absa CIB joint CEO’s

Highlights:

• Headline earnings rose 3% to R8 billion
• Return on equity improved slightly to 16.9% from 16.8%
• Revenue grew 3% to R37 billion
• Operating expenses rose 4% to R20.8bn.
• Cost-to-income ratio deteriorated slightly to 56.2%
• Dividend increased 3% to R4.90 per share
• Pre-provision increased 1% to R16.2bn

Absa Group Limited reported an increase in earnings, revenue and dividend for the first half of 2018 today. The group reported its first set of financial results as `Absa Group’ after being renamed on 11 July this year as it separates from the international Barclays PLC group.

Normalised headline earnings increased 3% to R8 billion compared with the first half of 2017 and income grew to R37 billion. The group will pay shareholders an interim dividend of R4.90 per share, up from R4.75 per share a year earlier.

“Our performance was in line with our guidance and should be considered against the tough macro backdrop in South Africa,” said Jason Quinn, Absa Group financial director. South Africa, which accounts for more than three-quarters of the group’s total earnings, recorded a 2.2% contraction in gross domestic product in the first quarter.

Earnings were boosted by growth in the group’s retail and business banking business in South Africa, its banking business outside of South Africa, and in the wealth, investment management and insurance unit. This was partially offset by a 6% decrease in earnings from the group’s corporate and investment banking business in South Africa.

Well-controlled cost growth of 4% exceeded modest but improving income growth of 3% and resulted in a slightly higher cost-to-income ratio of 56.2%, up from 55.5% in the first half of last year.

The group continues to have solid balance sheet assets of R1.2 trillion (about $90 billion) and strong capital and liquidity levels. The common equity tier 1 ratio of 12.2% is above internal targets and the total group capital adequacy ratio increased to a healthy 15.7%.

*Note: Normalised numbers are presented to adjust for the consequences of the separation and better reflect the Group’s underlying performance.

Absa Group Limited today reported good progress in positioning to deliver on the new corporate strategy it launched in March 2018. The group, previously known as Barclays Africa Group, reiterated its goal to double its share of banking revenues in Africa to 12%.

“An important milestone in positioning for delivery against our strategy was achieving full regulatory deconsolidation, which means that UK regulators no longer regard Absa and Barclays PLC as a single entity,” said Maria Ramos, Absa Group Chief Executive. “In practical terms, it means that we no longer operate under any policy frameworks set by Barclays PLC. For example we are now free to set our own risk appetite.”

Absa Group announced a new operating model in April, empowering business unit leadership teams to have end-to-end accountability for delivery. Further reorganisation is now taking place at business unit level.

The reorganisation process started with retail and business banking SA (RBB SA), which accounts for more than half of Absa Group’s total income.

“In our retail and business banking unit in South Africa, we now have an operating model which has reduced management layers, enables faster decision making and brings the leadership team closer to customers and colleagues” said Ramos, adding that positive momentum seen in the latter half of last year has carried through into the first half of 2018. Notably, in the first half of the year, new home loans increased by 14% against a context where market growth was 4%.

A further separation milestone was reached in July when the group name was changed from Barclays Africa Group to Absa Group and a refreshed brand was launched as an expression of the group’s new identity and its digital ambition. In our markets outside South Africa, subsidiaries will begin the change to Absa from mid-2019 – subject to securing all relevant approvals.

Absa has made progress in its aspiration to build and entrepreneurial, digitally-led bank.

“We have made it clear that our ambition is to be a digitally-led organization, digitally capable and scalable” said Ramos.

• In Kenya, Absa’s local subsidiary launched Timiza – an app-based personal loans platform – in March this year. Timiza’s customer base had grown to more than two million by 25 July.

• Absa launched WhatsApp banking and Samsung Pay as new propositions for its South Africa retail business. Uptake particularly in WhatsApp banking has exceeded expectation with more than 10 000 customers registering for ChatBanking on WhatsApp within the first 20 days.

Looking ahead, Absa will continue to drive the growth momentum recorded in retail and business banking, and address opportunities in the wealth and investment management and insurance business unit, and in the corporate and investment banking portfolios.

 

Bank commits to building infrastructure for school, while donating equipment and upgrading community facilities

Absa Executives commemorated Mandela Day at the Moletsane Asports Centre in Soweto, where they donated sports equipment, and at the David Makhubo Secondary School in Kaalfontein, where they committed to building a library and computer lab for students.

Speaking at the David Makhubo Scool, Absa Group Deputy Chief Executive Peter Matlare said Madiba’s belief in and love of education inspired Absa to continue making a significant contribution to the lives of young people.

“This commitment we are making here today forms part of our strategic collaboration agreement with the Nelson Mandela Foundation where we committed to supporting the building of libraries with them. This is one of three sites we are involved in. We look forward to delivering this project and are excited about the opportunities it will open up to you”, he said.

Absa’s commitment to youth through education and skills development is part of Absa’s social promise to be an active force for good across all communities in which it operates. Education and Skills Development has been a key pillar of the banking group’s active citizenship, and includes awarding over 3000 higher education scholarships in 2018, as well as partnering on the YES initiative, funding university research and institutional chairs, and offering the free ReadytoWork programme to help youth transition from education to the world of work and self-employment.

Sazini Mojapelo, Head of Absa Group Citizenship, speaking at the handover of sports equipment at the Moletsane sports Centre, said “As Absa we are clear that we are a purpose orientated African bank – rooted in the countries we serve – recognizing that our own sustainability and wellbeing are directly linked to the sustainability and wellbeing of the communities in which we operate.”

She added “This is more than just a donation of kit and equipment but an investment in your futures and the future of our country.”

David Makhubo Secondary School was established in 2014 as a response to the challenges posed by the socio-economic conditions in the community of Kaalfontein, Extension 23, Midrand and surrounding townships.  Currently the school has 1151 learners, from grade 8 to grade 12, and continues to face many challenges when it comes to infrastructure and resources needed to provide the best possible learning environment for their students.

It is with this in mind that the Absa Transactional Legal team, which has supported the school for the past 2 years with job shadowing initiatives, as well as sanitary towel drives, continues to look for ways to elevate the type of support provided.

Bank commits to building infrastructure for school, while donating equipment and upgrading community facilities

Absa Executives commemorated Mandela Day at the Moletsane Asports Centre in Soweto, where they donated sports equipment, and at the David Makhubo Secondary School in Kaalfontein, where they committed to building a library and computer lab for students.

Speaking at the David Makhubo Scool, Absa Group Deputy Chief Executive Peter Matlare said Madiba’s belief in and love of education inspired Absa to continue making a significant contribution to the lives of young people.

“This commitment we are making here today forms part of our strategic collaboration agreement with the Nelson Mandela Foundation where we committed to supporting the building of libraries with them. This is one of three sites we are involved in. We look forward to delivering this project and are excited about the opportunities it will open up to you”, he said.

Absa’s commitment to youth through education and skills development is part of Absa’s social promise to be an active force for good across all communities in which it operates. Education and Skills Development has been a key pillar of the banking group’s active citizenship, and includes awarding over 3000 higher education scholarships in 2018, as well as partnering on the YES initiative, funding university research and institutional chairs, and offering the free ReadytoWork programme to help youth transition from education to the world of work and self-employment.

Sazini Mojapelo, Head of Absa Group Citizenship, speaking at the handover of sports equipment at the Moletsane sports Centre, said “As Absa we are clear that we are a purpose orientated African bank – rooted in the countries we serve – recognizing that our own sustainability and wellbeing are directly linked to the sustainability and wellbeing of the communities in which we operate.”

She added “This is more than just a donation of kit and equipment but an investment in your futures and the future of our country.”

David Makhubo Secondary School was established in 2014 as a response to the challenges posed by the socio-economic conditions in the community of Kaalfontein, Extension 23, Midrand and surrounding townships.  Currently the school has 1151 learners, from grade 8 to grade 12, and continues to face many challenges when it comes to infrastructure and resources needed to provide the best possible learning environment for their students.

It is with this in mind that the Absa Transactional Legal team, which has supported the school for the past 2 years with job shadowing initiatives, as well as sanitary towel drives, continues to look for ways to elevate the type of support provided.

 

Absa Group Limited lit up the Johannesburg skies with Africa’s first live Intel® drone light show, as it celebrated the renaming of the group, heralding a new era for the bank in its push to become a forward-looking African bank in a digital age.

“The spectacle has been set against the cosmopolitan backdrop of the Johannesburg skyline and highlights the new strategic direction of the bank which is to be a digitally led organisation using technology to bring to life its purpose and serve its customers,” says David Wingfield, Head of Group Marketing at Absa Group.

Absa partnered with Intel® to host a live drone show, which also embodies Absa Group’s new purpose of “bringing your possibility to life”.

The drone show was animated by the same animator who flew over 1,200 Intel® Shooting Star™ drones above PyeongChang for the Opening Ceremony of the Olympic Winter Games, breaking a Guinness World Records title.

Absa also introduced a new brand design that will be rolled out in South Africa and completed in 2019, as well as rolled out to Absa Group’s banks that were previously Barclays-branded in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, Tanzania, Uganda and Zambia by mid-2020.

“We are committed to building on the pedigree of the Absa brand as a strong and stable bank to continue working towards becoming a digitally led African bank equipped to meet its citizens’ needs and bring their possibility to life,” concludes Wingfield.

Barclays Africa Group Ltd shareholders today approved that the group changes its name to Absa Group Limited in July, setting in motion the start of one of the largest re-brand projects in Africa at this time.

“The vote in support of our name change in July marks another milestone in our separation from Barclays PLC to become an independent African bank with global reach,” said Wendy Lucas-Bull, Chairman of Barclays Africa Group Ltd. “This is the start of a brand journey that will galvanise our operations across Africa behind a single brand and purpose.”

As part of the process, the new name must be registered by South Africa’s Companies and Intellectual Property Commission. In accordance with the timetable that we have shared with our shareholders, the name change is expected be effective on 11 July 2018. The group’s share code on the Johannesburg Stock Exchange (JSE) will change from BGA to ABG on 11 July.

The group name change will not affect functionality of Absa or Barclays products and services in Africa.

The group’s Barclays-branded banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, Tanzania, Uganda and Zambia will continue to trade as ‘Barclays’ even after the group name changes to Absa in July. The Barclays-branded banks in these countries will be rebranded at a later stage, subject to regulatory approvals in those markets.

Following the sell-down by Barclays PLC of its majority shareholding in Barclays Africa Group to a minority position in 2017, the two companies are separating. As part of the separation agreement, Barclays Africa Group will cease using the Barclays brand in Africa in 2020.

“We will in the future have a brand that is reflective of our African identity – this as an enormous opportunity as we create a banking group that Africa will be proud of,” Lucas-Bull said.

After 13 weeks of intensive networking, mentoring and development, 10 companies have showcased their innovative fintech businesses at a ‘Demo Day’ in Cape Town, as the first-ever cohort of the Barclays Accelerator in Africa concluded. The three month fintech accelerator programme was hosted by Rise, Barclays Africa’s open innovation hub, in Cape Town.

The Barclays Accelerator, powered by Techstars, is an intensive startup programme designed to capture, shape and scale the next generation of innovative fintech businesses. The programme draws upon mentors from across Barclays and the Techstars network.

An audience of more than 400 including investors, industry experts, fintech specialists, as well as Absa and Barclays executives attended the Demo Day to hear how the startups are tackling different challenges on the African continent and ultimately help shape the future of financial services across insurance, payments and agriculture.

Demo Day

Commenting on the programme, Head of Open Innovation at Barclays Africa, Paul Nel said: “As Barclays Africa we are committed to driving leading fintech innovation that translates into lifestyle-enabling products and services for our customers, and creates greater financial inclusion across the continent.”

“We are thrilled with the quality of the ventures. This first-ever cohort to participate in the Barclays Accelerator programme in Africa has set the bar very high. They richly deserve the opportunity to showcase their businesses at the Demo Day, and attempt to secure further investment and signed POCs.”

Yossi Hasson, Managing Director of Techstars in Cape Town added: “The Barclays Accelerator, powered by Techstars once again showed why it is the pre-eminent fintech accelerator in world. This Africa class will now join the Techstars global ecosystem which spans 15 000 community leaders, mentors, founders and investors across 137 countries.”

During the event the companies highlighted their impressions of the programme.

Asoriba (Ghana): “Depth is the word I will use to describe our experience in the Barclays Accelerator programme. With the help of the team, we have gone deeper into our business and have identified what we need to do to make it a success. Before now, we have been struggling to focus on our end-goal.

Thanks to great leadership of Yossi Hasson, MD of Techstars Cape Town, and the entire team, we have learnt to be excellent at what we do and dive deep into the clients’ needs. We also lacked knowledge around email marketing and how to keep a clean domain name. We actually had issues with our mass email provider. Techstars helped us fix these issues, signed us up on a new email service and helped us get our transactional and marketing emails up and running again,” said Nana Agyeman-Prempeh.

BenBen (Ghana): “For BenBen, this programme has been instrumental in growing our network and stakeholders that will participate in our initial launch with the Ghanaian government. With the advice from the mentors we have been able to expand our business model to include B2B services for banks, insurance providers, and real estate firms. BenBen aims to launch a pilot programme which will have a searchable digital map populated with data from the Lands Commission, Barclays Africa and BenBen surveyors to our initial users which will be Barclays Africa employees in Ghana,” said Emmanuel Noah.

Beyonic (Uganda and United States): “For Beyonic, participating in the Barclays Accelerator, powered by Techstars gives us the ability to supercharge our business by fast-tracking our ability to work with the bank and the incredible Techstars network. By the end of the programme, we are looking to close several major deals with global financial institutions and position Beyonic for rapid growth in multiple markets,” said Luke Kyohere.

iNuka Pap (Kenya): “As one of the start-up companies going through the Barclays Accelerator, iNuka Pap is getting rich mentorship from the vast selection of experts. We are finding better, faster and more effective ways of running our business. In addition, we are making valuable partnerships with corporates that are strategically placed in the market. We have enhanced our company’s business in terms of market penetration and operations. We are confident in our product and hope we can use it to significantly improve the lifestyle of people living in rural Kenya,” said Waweru Kuria.

Jamii (Tanzania): “The Barclays Accelerator programme tops all my MBA studies put together. I have received the most direct training on running my business, predicting economies and matching it up in my business case, product design, financial modelling, marketing best practice and most of all made a lot of worthwhile connections while networking.

“The Barclays Accelerator programme has transformed me as an individual to a more confident entrepreneur. I understand my work and the worth of my business. I have improved my persona and most of all transformed our business. I hope to have found solutions to our acquisition problem and attract enough investors to expand my business in Tanzania and later grow in Kenya, Uganda, Rwanda, Ghana and South Africa,” said Lilian Charles Makoi.

ReAble (Lebanon): “Barclays Accelerator, powered by Techstars has provided us with an immense amount of help ranging from mentors to connecting us to major experts, executives and entrepreneurs in the fintech industry. The guidance and opportunities that we received here have accelerated our company further beyond what we expected to achieve. I would say three months of the programme is equivalent to three years’ worth of company standalone progress,” said Emile Sawaya.

SimbaPay (Kenya and Nigeria): “Two key value adds from participating in the Barclays Accelerator, powered by Techsatrs are firstly learning from much wiser mentors and secondly, initiating great partnerships within the Techstars network. We expect to expand our remittance services leveraging Barclays Africa’s reach and SimbaPay’s agility. The programme also helped to sharpen our business strategy and execution, and to secure investment to support our growth plan,” said Enoch Nyasinga Onyancha.

Social Lender (Nigeria): “The programme has been extremely valuable to us as individuals and as a business. Completely eye-opening and the networking is out of this world. We hope to have a successful POC and begin preparation for a fully-fledged business partnership with Barclays Africa and scale very quickly,” said Faith Ekwebelam.

Tech4Farmers (Uganda): “To tap into the kind of network the programme has given us access to in just three months would otherwise have cost a lifetime of hard work. It’s priceless. We hope that we will be better positioned to give our customers a much-needed better experience in our field,” said Deogratious Afimani.

WizzPass (South Africa): “This programme has given us access to an extremely big network of individuals willing to help us through our business journey and enhance our chances of success. The knowledge gained has been immense, from master class sessions to interacting with fellow start-ups and mentors in the programme. We have concluded a successful POC with Barclays Africa as well as securing seed funding. We hope to enhance our traction in the corporate and retail sector,” said Bradley Hornby.