Standard Bank applies for a representative office in Egypt

Standard Bank Group Limited is a major South African bank and financial services group. It is Africa's biggest lender by assets. Photographer: Armand Hough / Independent Newspapers

Standard Bank Group Limited is a major South African bank and financial services group. It is Africa's biggest lender by assets. Photographer: Armand Hough / Independent Newspapers

Published Apr 10, 2024


Standard Bank is weighing up opportunities in north Africa and has revealed that it has applied for a banking representative office in Egypt in a bid to seize up possibilities of growing its market share from rising intra-African trade.

South African banks have been entrenching their presence across Sub Saharan Africa but have largely not significantly forayed into north Africa.

For Standard Bank, operations in the rest of Africa, excluding SA, raised earnings by 49% in the year to December, helping to drive overall group headline earnings for the period by 27% to R43 billion.

Africa’s largest lender by assets told Business Report by email yesterday that expansion into north Africa was now top priority.

This comes as the South African market is struggling against infrastructure inefficiencies and growing credit impairments.

“Over the past few months, we have explored the feasibility of expanding our footprint into Egypt. We have applied for licence to open a representative office in Egypt,” Standard Bank said in emailed responses to questions.

In the year to December 2023, Standard Bank said its credit impairment charges had increased by 22% to R16.3bn, pushing its credit loss ratio, which gauges the percentage of bad loans in relation to total lending over a particular period, up to 98 basis points from 83 bps.

Standard Bank said its expansion into Egypt was in pursuit of a “strategic priority to explore and assess opportunities to expand into new African markets” that include north Africa.

North Africa is “home to four of the top 10 countries by size of banking assets” and stands out “as a compelling opportunity” for Standard Bank.

“Egypt, the largest economy in north Africa and the second largest in Africa by banking assets, represents the most attractive, meaningful opportunity,” it said.

Standard Bank has previously said it was interested in foraying into Morocco, another north African country.

Despite the lender’s bullishness to expand further into Africa, analysts at the bank noted that “South African businesses have generally not done well abroad, including forays” into the rest of the continent.

To counter this, Standard Bank was positioning to be a pan-African Bank that is able to service transnational and other depositors’ cross-regional banking and financial requirements.

South Africa was also currently struggling for robust economic growth which sharply contrasts developments in other continental markets such as Egypt.

“In contrast to SA, most of the sub-Saharan economies are projected to grow more than 3% pa, some even more than 5% pa. We believe this is an appealing macro backdrop,” it said.

PwC reckons that there are strong regional opportunities for South African banks in the continent, in spite of the challenges back home.

These include sustainable financing initiatives to alleviate concerns associated with high carbon economies to the significant infrastructure investments required to support Africa’s economic and population growth expectations.

“The major (SA) banks are acutely aware of their unique positions to extract and provide value within these and other industry-defining opportunities,” said PwC in its March 2024 South Africa Major Banks’ Analysis report.

Brad Maxwell, managing executive for investment banking at Nedbank Corporate and Investment Banking, was recently quoted saying South African banks have become more relevant in Africa, having grown their lending businesses in primary sectors such as mining, energy, infrastructure, property finance, agriculture, and sovereign lending.