Plans to increase retail customers to 500,000 from 100,000
Retail banking seen contributing to 15% of revenue from 6%
Standard Chartered Plc’s Nigerian unit is joining the rush to grab a larger share of the consumer-banking market in Africa’s most populous nation, targeting a five-fold increase in customers over the next two years.
“Retail is where we’re going to see exponential growth,” Lamin Manjang, the chief executive officer for Standard Chartered’s Lagos-based subsidiary, said in an interview. “It’s just a logical expansion of our portfolio” so the company can be diversified should there be a downturn in other parts of the business, he said.
Standard Chartered, which has focused on corporate banking since opening an office in Nigeria 20 years ago, plans to expand retail banking to 15% of local revenue over the next two years from 6%, the CEO said. Retail customers are expected to increase to about 500,000 from 100,000 by using digital technology that enables customers to open an account in less than five minutes, Manjang said.
The push by the London-based emerging-markets lender comes as banks scurry to meet a central bank directive to increase their loan-to-deposit ratios to 60% by the end of this month. With only two out of the six biggest banks meeting the threshold, consumers and small- to medium-sized businesses are being bombarded with offers that allows them to take out loans via a text message.
Who Is Where in Nigerian Credit?
Four out of six Nigerian biggest banks fall short of 60% Loan to Deposit Ratio
Source: From the banks website
Note: As of June, 2019
The increased use of technology and rapid urbanization is also opening up a market in a nation of 200 million people, of which a quarter don’t have financial services. Standard Charted plans to offer a service that will allow customers to buy mutual funds within or outside the country using their mobile phones, Lamin said. The lender, which has operations in mainly three Nigerian cities, is “going to spend a lot on digital” to reach customers, he added, without saying how much.
Read more: African Behemoth of 200 Million Awakens to Retail Banking
Standard Chartered is looking for 5%-10% growth in its overall loan book this year. In personal loans, it has doubled the size of the facility it offers to 20 million naira ($55,300), Manjang said.
“Within our retail portfolio we have a segment called business banking,” he said. “It is a segment we see a lot of opportunities for growth. Currently, we believe the scale of that business is small relative to opportunities we see in that market.”
The company would like the central bank to relax the penalty on the loans-to-deposit ratio target it announced in July as part of a raft of measures aimed at stimulating the economy by boosting access to credit.
“I hope the penalty for noncompliance can be waived or looked at,” Manjang said. “People are put under pressure to meet a certain target within a short period of time.”
Read more: Banks in Firing Line as Nigeria Looks to Loans to Fuel Economy
The rush might initially cause banks to price their loans too aggressively, the CEO said, although over time, banks will put in “measures to symmetrically grow their loan books in a responsible way.”
(Updates with digital plans in paragraph after chart)