African Banking and Digital Finance

First Bank of Nigeria to overtake Zenith as Nigeria’s most valuable lender

First HoldCo, the bank holding company behind First Bank of Nigeria, forecasts a jump in profits this year as a capital injection strengthened its balance sheet, helping cut costs and boosting loan recoveries. “The Lagos-based bank, which overtook Zenith Bank as the nation’s most valuable lender, expects profit before tax to exceed 1.2 trillion naira ($876 million) in the year through December, Olusegun Alebiosu, chief executive officer for First Bank, said in an interview,” reports Bloomberg. “The lender recovered 60 billion naira of bad loans this year, cut operating and funding costs, and put fresh capital raised through its recapitalization to work, helping turn the business around in the first half, Alebiosu said. He expects the non-performing loan ratio to decline to less than 10% next year from 13.9%, as the lender restructures problematic oil-sector exposures.” A jump in profits of 82 per cent in the half year to June contrasted with a 94 per cent drop last year as the business set aside provisions to clean up its loan book following directive from the central bank to end forbearance on overdue loans. Its share price has more than doubled this year.

Absa banks on East Africa’s growth story

In East Africa, Absa is continuing to grow is business as it looks to combine its banking interests in the fast-growing economy of Tanzania. “The current plan is for National Bank of Commerce, 55% owned by Absa and 30% by Tanzania, to take over the assets of Absa Bank Tanzania Ltd., said the people, who asked not to be identified because the information is still private. A combined entity will have about $3 billion in assets, making it the nation’s largest lender behind CRDB Bank and NMB Bank,” reports Bloomberg, citing people familiar with the matter. Absa, the continent’s third largest lender, is seeing its businesses in East Africa growing faster than its home market of South Africa. “Absa also started an offer to raise its stake in its Kenyan business, giving the unit — which has total assets of more than $4 billion — an equity value of close to $1.5 billion. In Uganda, the South African bank received approvals to buy Standard Chartered’s wealth and retail business, clearing the way to expand its business in that nation. The broader group has a market value of $11.9 billion and asset of about $136 billion.” The IMF projects that the economy of Tanzania, home to 70 million people, will grow at 5.9 per cent this year.

Apple keeps premium pricing and introduces lease-to-own

As the top Apple products head towards the price of a small car, the tech player is introducing a new way to keep up with the Joneses: lease to buy. Apple is to launch a lease-to-own programme for its hardware in partnership with Klarna, the buy now pay later specialist, with lease term up to two years for iPhones and Apple Watch, and up to three years for Macs and iPads will be up to 36 months. The company’s prices are rising fast due to higher chip costs, so the leasing offer will allow the company to maintain its premium pricing while spreading the cost out. “The devices can either be kept or returned at the end of the leasing period, while upgrades to new devices will also be available (hence the name of the program),” writes MSN. “A leasing program is an obvious move for Apple, at this point. The iPhone maker has been battling supply chain issues wrought by ‘RAMageddon’ — the industry-wide shortage of memory chips that is driving up the price of hardware. Those shortages have been driven largely by the AI industry, which is gobbling up so much memory that it’s not leaving much for the rest of us.”

Pix and BRICS

For a few years, the US worried that BRICS economies might create a common currency. Instead they have individually been developing challengers to the pioneering and long-established US networks Visa and Mastercard. Brazil’s Pix in particular has now become a major point of conflict as the US government lobbies on behalf of its payment companies, which are warning investors that the Pix model could threaten their business model. “U.S. Trade Representative Jamieson Greer named Pix, operated by Brazil's central bank, as one of the barriers to trade that he cited to justify fresh 25 per cent tariffs on imports from Brazil taking effect this week,” reports Reuters.

Brazilian officials counter that Pix is a public service that has in fact greatly increased the use of cards in the country, in particular credit cards. “While similar services exist in several countries, including India's UPI and FedNow in the United States, none has matched the explosive uptake of Pix. Through the first half of this year, Brazil's central bank signed agreements to share information about Pix with 65 international counterparts, from rich economies such as Germany and Canada to emerging-market peers such as South Africa and Turkey. At a news conference last week, where senior officials denounced the U.S. tariffs as politically motivated, central bank chief Gabriel Galipolo dismissed complaints about Pix's impact on card revenues and market access as absurd. He said the number of people using credit cards had increased in absolute terms because Pix pushed so many Brazilians to open bank accounts, and that Pix was a public service, not a competitor. ‘It would be kind of like saying that creating basic sanitation hurt the revenues of those who own water trucks,’ he said. ‘Pix is really a model and the direction everyone is moving toward’.” 

Pepkor banks on its deep roots in South Africa’s informal economy

South Africa’s Pepkor continues to assemble the infrastructure for its planned digital bank, expected to launch in the next year. The retailer will combine its existing fintech firm Flash with Shop2Shop, reports Bloomberg, to create a company valued at $1.3 billion as it grows its presence in South Africa’s informal economy. “The retailer will pay 1.57 billion rand ($95.3 million) in cash for shares in Shop2Shop and contribute its entire stake in Flash — valued at 10.6 billion rand — to the combined company, according to the statement. The transaction will scale the retailer’s payments, lending and merchant-commerce offerings. It will also expand Pepkor’s reach in South Africa’s townships, which have an economy estimated to be worth about 900 billion rand as it prepares to start the bank. The Cape Town-based retailer’s Flash serves 170,000 informal traders, enabling them to sell virtual products such as airtime, mobile data and prepaid electricity, and processed 60 billion rand in transactions in the year through September. Shop2Shop, a payment platform for informal traders, serves more than 210,000 users and processes about 1.8 billion transactions a year.”

Barclays launches novel credit card partnership with Samsung

Is it a card? Is it a phone? The US yesterday saw the launch of the Samsung Galaxy credit card, as the South Korean electronics giant partners with Barclays to issue a new credit card. “The Samsung Galaxy Card, issued by Barclays and running on Visa's network, will allow users to apply, manage accounts, track spending and redeem rewards entirely through Samsung Wallet,” reports Reuters. “The card offers 5% cash back on Samsung purchases and additional rewards on Samsung Pay and other spending categories. The credit card launch also puts Samsung in direct competition with Apple Pay, which dominates payment services in the US. The launch comes as technology companies and banks race to deepen ties between digital wallets and financial products, seeking to make smartphones the primary device for payments and money management, and both Samsung and Barclays want to capitalize on it.” After the iPhone, the Samsung Galaxy is the top-selling smartphone in the US, and 70 per cent of US households have a Samsung device. Barclays has been trying to grow its US business and in 2024 acquired the General Motors card portfolio.