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Asset manager Coronation remains sceptical about the growth prospects of Absa’s retail franchise in South Africa, which has ceded market leadership to rivals over the past two decades, underscoring the herculean tasks that lie before the franchise’s new boss, Sitoyo Lopokoiyit.Absa poached Lopokoiyit from fintech major M-Pesa earlier this year, with him taking the helm of its personal and private banking (PPB) business in April.Coronation, which marshals about R800bn in assets, said it is pleased with the appointments Absa made in its corporate and investment banking (CIB) since Kenny Fihla took over as group CEO just over a year ago.However, the asset manager, which has invested its clients’ money in Absa, said it is not yet sold on the retail banking prospects, with the ball back in the lender’s court to convince the market that it will regain lost ground in retail banking, where it used to hold a dominant position, particularly in the home loans market.“We initiated a position in Absa during the period, as low market expectations combine with a compelling turnaround story within the South African business and continued success in its African assets,” Coronation said in its second-quarter quarterly review.“Since arriving, he [Fihla] has focused the business and brought in new talent to help grow the CIB and African businesses. We have been sceptical over the strength of Absa’s South African retail franchise for a long time and this view has been vindicated as it has shrunk itself to a near immaterial portion of earnings.“On a 7x PE [a high earnings yield of about 14.3%, which typically signals that a stock is heavily discounted, cyclical, out of favour, or facing severe market pessimism regarding its future growth] and 8%-9% dividend yield, the market is taking a very cautious view on Mr Fihla’s ability to turn the business around. If he is successful, Absa will provide excellent returns from this base, with the high dividend yield providing some downside protection in the event of the turnaround struggling.”Absa in the 2025 financial year reported headline earnings of R7.5bn from its PPB business, its CIB raked in R13bn in profit while business banking underwhelmed with a R3.9bn profit, down 8% from the previous year.All three businesses are under new leadership, as Fihla rings in the changes to get the group on a higher growth path.To achieve his lofty aims of building a dominant Pan-African player, Fihla has swelled the top ranks of the lender with new talent, most of which comes from his erstwhile employer, Standard Bank.The CIB business has been put under the tutelage of Zaid Moola, Fihla’s understudy during their days at Standard Bank’s CIB franchise, which they helped build into a formidable player with R1.5-trillion in assets.Absa has poached respected investment banker Sola Adegbesan, who has crossed the floor from Standard Bank, joining the red bank as managing executive responsible for CIB Africa regions, reporting to Moola.(Dorothy Kgosi) Musa Motloung also joined Absa as group strategic risk officer, ditching his role as chief risk officer in Standard Bank’s CIB business.Avikaar Ramphal joined Absa as its head of strategic risk from Standard Bank, where he had been portfolio head, strategy enablement, in the CIB business.Clive Potter, erstwhile head of client coverage in South Africa for Standard Bank CIB, has also joined Absa as the managing executive for client coverage in its CIB business. Absa has prised away the head of legal at Standard Bank’s CIB franchise, Francisco Khoza, as its deputy general group counsel.Absa has not only raided Standard Bank for talent, though. Saloshni Pillay and Giles Douglas have crossed the floor from Deutsche Bank and Rothschild and Co, respectively.
