Mr Wandera speaks during the release of financial results. Absa says 50 percent of its income in 2024 came from retail and markets. Photo / Courtesy
When Standard Chartered Group announced in November last year that it was “exploring the potential sale of its wealth and retail banking businesses”, particularly in Uganda, Botswana, and Zambia, the conversation in public was, retail banking had become a drain on on banking operations.
Many analysts then argued that Standard Chartered was exiting retail banking because it required much more to sustain in terms of branch network, human resource, and cash points deployment, yet it offered low returns.
Of course, although Standard Chartered had indicated that it was exiting retail to “concentrate resources in markets where we have the most distinctive client proposition”, the conversation in the days after the announcement shifted on what was working and not working in the banking sector.
In fact, some said, retail banking was no longer viable at a time when technology had forced a shift in the way business is done.
However, data tells a different story and shows that retail banking remains an important part of the banking sector.
Take, for instance, Absa. While presenting its financial results for the year ended December 2024, Absa executive director Michael Segwaya said that, according to their revenue diversification data, retail and markets were the biggest revenue contributors.
For instance, he said, retail and markets accounted for “50 percent of our revenue”, followed by corporate, which accounted for 25.3 percent, while business banking and treasury accounted for 15.7 percent and 9.7 percent, from which the bank realised a combined revenue of Shs546b. We would not independently establish the size of Standard Chartered’s retail business; however, across the sector, the figures tell the story of a business segment that continues to be a major revenue anchor in the banking sector.
During the year ended December 2024, Stanbic Bank earned Shs173b from low-interest loans to women entrepreneurs, and lent out Shs94b to the same group.
The bank, on the other hand, lent out Shs973b to small and medium enterprises, including Shs76b through the Stanbic Business Incubator. All this, including others, was under the retail segment, which underscores its importance.
Absa performance
The steady performance in retail banking, therefore, partly propelled Absa’s customer deposits to Shs3.18 trillion from Shs2.9 trillion, while total income rose to Shs546b from Shs475b, supported by growth in interest income to Shs311b and non-funded income to Shs235b.
Absa’s expenses rose from Shs287b to Shs312b, but it posted an improved profit position, which grew from Shs146b to Shs178b or 22 percent.
Customer loans and advances increased from Shs1.7 trillion to Shs1.9 trillion, driven by an increase in trade loans, asset and mortgage financing, and credit cards.
Mr David Wandera, the Absa interim managing director, said the bank continues to prioritize all sectors of the economy by extending services to small and medium enterprises, to large businesses.
