ambitious plans to grow its presence in the challenging Nigerian
market via its local subsidiary Stanbic IBTC. The bank’s CEO, Chris
Newson, tells Douglas
Blakey of his desire to grow its retail franchise via a
branch expansion programme coupled with an enhanced range of
products.
Stanbic IBTC, the Nigerian subsidiary of
Africa’s largest bank by assets, Standard Bank, plans significant
growth in the country via an expanded branch network, improved
online offering and mobile banking launch, backed up by an
augmented range of retail products.
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While many banks remain sceptical about growth
prospects in Nigeria, Africa’s most populous nation, Stanbic IBTC
is determined to make a splash in the country, albeit from a low
base.
Standard bought control of Nigeria’s IBTC
Chartered in August 2007 and merged it with its Stanbic Bank
subsidiary in the country to form Stanbic IBTC, the first banking
merger in Nigeria since the Central Bank of Nigeria’s consolidation
exercise concluded in 2005, cutting the number of banks from 89 to
25.
The merged entity, with 65 outlets, launched
in March 2008 with a capital base of NGN60 billion ($509 million)
but a retail market share of only around 1 percent. But Stanbic
IBTC’s CEO, Chris Newson, says the bank is ideally placed to make a
strong push in the country.
“The merger gave [Standard] a fresh entry into
the Nigerian market and we are uniquely positioned to leave a
lasting legacy,” he said.
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By GlobalDataAn integrated advertising campaign, rolled out
at the time of the merger with IBTC Chartered, flagged up the birth
of Stanbic IBTC complete with the tag line ‘The New Turn in
Banking’.
“We wanted to say ‘we are the new kid on the
block’… We understand the local market but have a strong
international partner,” said Newson.
Profit up 74% over nine
months
Stanbic IBTC, which changed its
financial year end from March to December following the merger,
reported profit before tax up by 73.6 percent to NGN13.47 billion
for the nine months to 30 September 2008, from NGN7.76 billion in
the corresponding period of 2007.
Nigeria has 140 million people but only around
14 million have a bank account. The Central Bank of Nigeria
estimates that over NGN700 billion remains outside the reach of the
banking system.
Newson said: “We inherited a retail network
which was not very active and in the year since the merger, we have
had to get the network going again, get products out there, upgrade
the infrastructure, the links to branches, upgrade the ATMs and
understand the market better. It has been about getting back to
basics.”
Within the next two years, Stanbic plans to
roll out a full retail banking product range to add to its existing
bancassurance, unsecured personal loans, current account and
mortgages line-up.
A credit card launched in March, shortly after
the bank rolled out a new online offering.
Nigerian card penetration levels remain low.
With only around 24 million debit cards in circulation as of July
2008, there remains huge scope for growth in this sector, which
Stanbic IBTC is seeking to exploit. A new card aimed at the mass
market is being launched in April 2009 – though Newson would not
give any details.
The bank’s distribution channels will shortly
be further expanded with the launch of a mobile banking platform
channel in recognition of the explosion in mobile phone use:
Nigeria had around 55.3 million mobile phone customers in 2007
compared to only 32 million in 2006.
“We need to grow our footprint. Out of 4,500
branches in the country, we have only 65 but you will certainly see
some significant growth in branch numbers – our plans are for
organic growth – and aligned to that is the need to develop
alternative channels, ATMs, online and mobile,” stressed
Newson.
A reflection of the bank’s commitment to
improve customer service is evident from Stanbic IBTC remodeling a
number of its existing branches to improve the banking experience
for its customers.
As for the bank’s current segmentation
strategy, Newson is blunt. “We start at the top of the pyramid with
the affluent salaried and work our way down,” he says.
“At the moment, we could not handle an influx
of unbanked customers but as we progress, the idea is to go down
the segments.”
He adds: “All the indications are that Nigeria
is on the cusp of real retail expansion and when and how we tap
into that, as we move from a cash society to a credit driven
society, will present a number of challenges, which I believe we
can meet.”
