Standard Bank eyes R250 billion business banking goldmine

Standard Bank is stepping up its quest for more business clients in Africa. 

A surge in intra-continental trade and growth of mid-sized companies has created a R250 billion revenue pool for the region’s biggest lender to tap.

Its business and commercial banking unit aims to be the main financier for firms operating across Africa’s fastest-growing economies, part of a greater ambition to speed up earnings increases through 2028, Bill Blackie, the division’s CEO, said in an interview.

It will target its home base of South Africa — currently the biggest regional banking market — and cascade it to Nigeria, Ghana, Kenya, Uganda and Tanzania, where about “85% of the R250 billion BCB revenue pool is,” he said.

Small- and medium-sized enterprises, or SMEs, make up almost 95% of all active businesses on the continent and generate as much as 40% of its gross domestic product, which has resulted in increased overtures by lenders seeking to tap emerging opportunities, a report by African Banker found.

Further, 83% of African banks plan major investments into SME services by 2025, more than four times more than in 2024. 

Standard Bank, which operates in 21 African markets, has about 15% of the SME market and sees the opportunity split between an estimated R100 billion enterprise segment and a R150 billion mid-tier space. 

The BCB unit — which initially formed part of personal and private banking but became a standalone operation in 2021 — caters to small businesses with annual revenue of less than R100 million, medium-sized firms that generate up to R2.5 billion, and some larger corporates.

“From 2020 to 2025, we have doubled headline earnings and doubled the return on capital in the business from 19% to 38%,” Blackie said, adding that earnings across the continent averaged 30% annually over the period. 

African lenders are positioning themselves to capitalise on growing intra-continental trade flows.

According to the International Trade Centre, nearly half of small businesses export to markets on the continent, compared to just 14% for larger firms. 

“The biggest trade bloc for us today is trade into the continent, and it continues to be the fastest-growing trade segment,” Blackie said.

Standard Bank anticipates that the African Continental Free Trade Area — which seeks to create a single market spanning more than 50 countries and 1.3 billion people — will accelerate the trend.

The World Bank estimates that the pact could more than double intra-African exports by 2035.

More intra-African trade will translate into demand for Standard Bank’s trade finance, payments, foreign exchange, working-capital facilities and cash-management services, thanks to its extensive footprint. 

Still, the lender’s strongest position remains in South Africa, where it enjoys 21% of the small business banking segment and a market-leading 28% in the mid-tier. 

Overall, Standard Bank is ranked second as it battles increasing competition from peers Capitec Bank, Nedbank, and FirstRand.

The sector generates an estimated annual revenue of about R5 trillion, according to a 2024 FinScope MSME South Africa survey.

Standard Bank plans to step up its outreach to retain its crown in the mid-tier market, using its services and partnership with the Industrial and Commercial Bank of China to attract smaller enterprises needing access to the world’s second-biggest economy.

“We think that it is very important to be strong in South Africa, and long term, we will want to challenge for that No. 1 position,” Blackie said.

Winning even a few additional percentage points of business would generate billions of rand in additional income, driving Standard Bank’s wider plan to deliver annual revenue growth of as much as 10% through 2028. 

“We target 8% to 9% compounded annual growth rate for BCB until 2028, but actually we see it growing into the double digits as you get close to 2028,” Blackie said.