M.FIN24.COM / 09 MARCH 2020 - 21.46 / CARIN SMITH
The proportion of black executive directors in South Africa's banking industry increased slightly from 36.6 to 37.6% between 2016 and 2018, but is still well below the industry target of 50%.
This is according to a report on transformation in banking released by the Banking Association of South Africa (BASA) on Monday. The report was compiled by independent research agency, Intellidex.
"Top and senior management remain too white and male," Kuben Naidoo, CEO of the Prudential Authority at the SA Reserve Bank, commented in the report.
While the majority of managers were black, the report found, most appointees in top senior management remained white.
The proportion of top black senior managers in South Africa's banking industry increased from 32% to 36% from 2016 to 2018. Overall, black managers accounted for 74.7% of bank management teams during 2018, up from 72.8% in 2017.
Furthermore, there was an increase in the total number of top senior managers between 2017 and 2018. The proportion of whites and blacks in top senior management increased at the expense of foreigners, the report found.
"More than half of the 52 net new appointees to top senior management were whites. The number of black Africans increased significantly, from 42 to 53. There was also a notable increase in the number of Indians in top senior management from 19 to 30," states the report.
The total number of black directors of banks' boards increased to 50.7% in 2018 from 39.8% in 2016, driven mostly by large banks such as FirstRand, Investec and Nedbank, where more than half the directors are black.
Black women now account for more than 25% of banks' board members - surpassing the industry target of 25%. Here too FirstRand, Investec and Nedbank have above-average women representation on their boards.
Junior management in banks is now 85% black. For BASA, this is important, as it means "there is a pipeline of young black talent and experience who will transform the management and executive ranks of the industry in coming years".
"Despite difficult economic conditions and increased competition, the banking industry has gone beyond what is required by the Financial Services Code (FSC) and the Black Economic Empowerment (BEE) Codes of Good Practice," states the report.
But, it added: "The industry as a whole, across some key measurements, is uneven and it must simply do better."
As for ownership in the banking industry, BASA expects that ownership measures are likely to continue to drift down in the coming years, as black investors realise value and diversify their portfolios.
The report found that in 2018, large banks' balance sheet exposure to black-owned small and medium enterprises (SMEs) increased by 13% to R28.8 billion; black agricultural financing increased by 41% to R4.5 billion; and spending on supplier development almost doubled to R795 million.
"The industry continues to provide affordable, accessible and appropriate transactional services to an estimated 80% of adult South Africans across income groups and geographical locations," states the report.
'Slow, steady, meaningful'
Naidoo comments in the report that "the story of transformation of the financial system in South Africa...is a story of slow, steady, meaningful and deep progress across a wide range of fronts. It is not a story of complete failure, but neither is it a story of complete success".
"The sector is both more competitive and diverse today in terms of the number of players, yet it remains safe and sound from a prudential perspective. These are all worthy achievements," says Naidoo.
In his view, direct, meaningful ownership by black people and women remains too low.
Furthermore, he says many boardrooms are still insufficiently diverse.
Cas Coovadia, managing director of BASA, says in the report that there can be no doubt that financial inclusion and transformation are now at the core of the business of banking in SA.
"As a vital part of the country's economic infrastructure, banks must operate in a way and at a pace that ensures they remain sustainable businesses that can offer their investors and customers a reasonable return," says Coovadia.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER