TBY talks to João Figueiredo, Chairman & CEO of Banco Único, on the impact of the eurozone crisis, target growth areas, and investment opportunities.
THE BUSINESS YEAR How would you evaluate the impact of the eurozone crisis on the Mozambican financial sector?
JOÃO FIGUEIREDO Mozambique has grown over the last 10 years, without much exposure to the international financial market, so the crisis has had an ambiguous effect. Most of the banks operating in this country are domestic institutions working for the local economy. For that reason, our banks have not been directly exposed to the toxic assets produced by the international crisis. This is a very small economy, and the local banks are mainly dimensioned to local economy. There are some investors who are more conservative about investing here, but there are new opportunities in oil and gas, infrastructure, and coal. We are seeing new international players with an appetite for investment in this country. In this regard, Mozambique is one of the countries that have enjoyed significant benefits in the wake of the international crisis.
Unlike other banks in the sector, Banco Único was set up by private investors. What other features make it unique in the local financial system?
Banco Único was the result of a dream. I have worked in this market for around 14 years, managing classic banks such as Standard Totta (Standard Bank, today) and Millennium bim. One decade later, I realized that there was a distinct market opportunity. The two main banks occupy around 60% of the market, and the four largest banks have 87%. Between 12% and 15% of the population is banked; it is a very small market with huge growth potential. It was obvious to me that there was an opportunity to do something different from the other banks and capture a share of the existing and future potential market. Most of the banks that had arrived were playing by the same principles: they sell products, they offer services, and they try to survive. We saw a lack of banks with a different kind of culture that would include improved services and better relationships. Banco Único wanted to create a close and intricate relationship with its customers. We are building a model in which we aim to understand our customers’ businesses and devise solutions for them. Therefore, the bank is not just selling products and services, but also finding solutions. Our branches are innovative and reflect a strong client orientation. More than transactional spaces, they are designed to receive clients and to make them feel welcome. Our branch layouts are different from what is common in the sector, with a fresh and vibrant color palette and comfortable private lounges fitted with interactive equipment where clients can keep abreast of daily news and explore the bank’s product and service offering, supported by a highly trained team well prepared to receive and service clients in a unique, welcoming manner.
What is your strategy to reach your target market?
Our initial strategy was to reach one particular segment of the market; we didn’t want to target the whole market at once. We have a branch network of 11 branches covering the five main cities of the country and we are planning to open three more branches by the end of 2012. We are targeting a segment that values a personalized, distinct, and high-quality service. Most of our business comes from corporate clients, though we also serve SMEs and individuals. In Mozambique, 80% of the people live in the countryside, so 11 branches cannot cover the entire population. However, we cannot forget those people, and we are looking for ways to reach out to rural communities.
How would you evaluate the bank’s performance since September 2011?
This is a small market and the existing banks are still reacting to new entrants. Regardless, the banks are doing well and different monetary policies have been implemented. In 2012, a new restrictive policy made some aspects of business difficult for the banks. The banks are expanding their number of branches, but not their asset value—supporting economic growth with room for improvement. In terms of our strategy, we are doing very well. In just 11 months we have opened 11 branches, covering the five main cities, and have already captured a 2% market share, which demonstrates that the market has been accepting our value proposition. In a very concentrated market, 2% is a lot. As a signal of confidence our shareholders increased the bank’s share capital, for the second time, making a total of $60 million.
Where is the bank looking for investment opportunities?
The Southern African Development Community (SADC) is a region with 300 million consumers, so nothing happens in this country that isn’t related to the SADC. One of the main sectors of the economy is agribusiness. Considering our neighboring countries, many investors are making inquires about potential customers, products, and sales. I always suggest that they must view this country as a platform with 23 million people from where they can produce and work with the surrounding markets.
Which sector would say has the most potential for growth, apart from the mining sector?
In an emerging economy, every sector is important. Agriculture is a sector we have to take into consideration, as 80% of the population lives in rural areas. The industrial sector is also very important, due, in part, to the SADC countries’ proximity. There is also potential for tourism in this country, as it has an incredible 2,800 kilometers of coastline. The tourism opportunities are fantastic, as are those in communications, transport, and infrastructure. In the financial sector, insurance companies are attractive as part of the emerging global economy. There is an amazing opportunity for investment in this country. The global financial crisis has been positive for Mozambique because people are looking for new and alternative ways to invest.
What role can Banco Único play in the investment sector, and why should people choose you?
Banco Único has people with skills and international experience who have worked in the UK, the US, Asia, and other markets. We have a team that understands the language of finance. Our team knows what project financing means, and we are familiar with the main issues regarding corporate finance. Many international companies come here knowing that Banco Único is a small bank, but they recognize our team’s reputation and appreciate our very strong international network and links with foreign banks around the world. We have created an international network, which is very important to us.
This interview will be published in 'The Business Year: Mozambique 2013'. To pre-subscribe please e-mail us at email@example.com
© The Business Year - August 2012