MOZAMBIQUE - Finance
Managing Director, Standard Bank
António Coutinho has worked in Standard Bank since 1999. He is the Chief Executive for Mozambique and a member of the Board and Executive committee in Angola. He has been a member of the World Vision Advisory Council Member in Mozambique since 2012. Before that he was Group Financial Accountant at Manica Freight Services for six years in Mozambique and Senior Auditor for Deloitte South Africa for three years.
The past 120 years is not just the history of the bank—it’s the history of the country. It reflects everything that Mozambique has gone through. We have seen some substantial changes over this period. The world has seen changes, and we as a bank have. More and more companies and sectors are looking to Africa to invest in now. Africa is definitely starting to awaken, and if you are there first you have every opportunity to maximize your position and your returns before everyone else discovers the good thing we discovered 120 years ago. As a business, we have seen dramatic changes, in everything from technology to the economy. Today there are branches across the country where people bring in their money, and as technology changes and people change their behavior, you will see more use of electronic banking and not cash because people can use their cell phones. That’s what we’ve learned over the last 120 years: the world keeps changing, Mozambique keeps changing, and we need to keep changing. Only the values you have as a business don’t change; value, integrity, and customer service—those things don’t go out of fashion.
The strategies revolve around what is happening in the resources sector in Mozambique because that’s going to drive economic development here. As a bank, we have been very involved in the infrastructure sector. It’s absolutely fundamental for the success of any operation in Mozambique that the infrastructure actually functions; proper infrastructure is required to meet the needs of the investments being made. For example, we have been involved in financing the railway line for coal, the ports, the Nacala Airport, and the road from Maputo and South Africa as well. Infrastructure, for us, is absolutely key. When you talk about resources, you are not just talking about assisting businesses in Mozambique, but you’ve also got to look at the stakeholders around them and ensure that the project goes ahead as smoothly as possible. As a bank, you have a great opportunity to see the whole picture around your customers, especially if you know them. You can understand what their needs are. At the end of the day, a lot of those stakeholders are your customers. As a universal bank we need to be at the cutting edge of technology developments and innovation to make services to our customers cheaper and more efficient. Thus, together with some growth in our branch network, we will incentivize our clients to use more electronic means of banking.
I think the key is to try and target the real sectors and all the companies in those sectors. By that I mean that if you are going to focus on coal, you need to focus on the main players in coal, but not just the big corporate interests in the middle, because there are a lot of other stakeholders around them, such as SMEs, and a lot of people working for those corporates. As a bank, you want a value proposition that really takes all of the suppliers and workers for the corporate interests into account, and the government stakeholders as well.
The banking sector is pretty much going to follow the telecoms industry. Branch infrastructure is expensive, but the technology around cell phones makes it far easier to bank than ever before. In the next few years I see a greater and faster adoption of alternative banking channels, like cell phone banking, in comparison to normal branch development in different areas. Standard Bank is working on this trend. We had to make a decision to either keep rapidly rolling out new branches, or look at cheaper alternatives. The biggest obstacle at the end of the day for rolling out thousands of branches is cost. Branches are expensive. The more you move into rural areas, the higher the costs are for telecoms, roads, infrastructure, water, and electricity. Also, it’s not as attractive for youngsters to work in a rural area as it is to work in Maputo. When you are trying to attract people into a banking organization, no one wants to work in a rural district. It’s gaining the trust of the customer on the other end so that they can get used to seeing not cash, but money on a screen, and that is valuable. If a cell phone is stolen or stops working, they don’t lose their money. There’s a lot of work that needs to be done around cashing out, where if you need money, there are ATMs nearby. There will be strategies in the longer term around how to cash out. I don’t think the branches will die, but there will be fewer over time. I absolutely see the future being cell phone banking, and what you can and can’t do on a cell phone. POS is definitely going to accelerate, as is the card business in Mozambique.
Standard Bank makes the second highest profits in the Mozambique banking system. As a business, we look at what we can contribute to this particular country. We want to be an African player. For us, the real value of this footprint is how we can link customers to other countries around this region. That is what Standard Bank is very good at: linking. As a business, we’ve grown dramatically over recent years, which is a mirror of what has happened in this economy. We are definitely a very important contributor to the Standard Bank group. There is no doubt that we are a good investment.
In the next 10 years, this is going to be a growing business. This is not a mature market, and therefore we are not yet a mature bank. I think we are going to have a fantastic 10 years of growth, especially when you start seeing the new mining operations come on stream and the new gas flows in Mozambique. It will bring a level of cash flow into Mozambique that we’ve never seen before. We are talking about government tax collections. If this economy keeps growing at the pace it is, you are going to see a very different bank in 10 years. You are going to see a bank that has more than doubled or tripled its size, and is substantially larger with far more complex products on offer as the market gets more sophisticated. We’ve managed to create more than 10 times the profit in 10 years. We bought the majority shareholding from Santander and, since then, we’ve pretty much multiplied our profit by 10 and it’s been about 10 years. Assets went from $300 million to $1.5 billion in the last 10 years. If the economy presents itself as it does today and continues to get better, there is no reason why we couldn’t more than double size of the bank. That’s quite an achievement.
© The Business Year – December 2014
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