Market share and growth: South African banks

SA-Bank-Cards

Two articles to read through when covering the concepts of market share and business growth:

http://m.news24.com/fin24/Companies/Financial-Services/Capitec-ousts-Nedbank-from-No-4-slot-20130508

http://businesstech.co.za/news/banking/37442/is-capitec-really-the-4th-biggest-bank-in-sa/

1 The first article claims that Capitec has recently overtaken Nedbank as South Africa’s 4th largest bank. In other words, Capitec has grown as a business. The second article, however, raises some points about what we consider as “growth” and how this would affect Nedbank and Capitec’s ranking.

Q: In which ways can we view Capitec as larger than Nedbank? At the same time, what criteria would we use to see Nedbank as remaining in 4th position?

2 According to the first article, FNB has the highest adspend (finance spent on advertising) of all the banks. However, FNB’s market share declined in spite of this. On the other hand, Capitec has the lowest adspend but its market share grew.

Q: Does this mean that advertising is not a sure way to increase market share? Are there other factors that we need to consider here?

1 thought on “Market share and growth: South African banks

  1. 1) Capitec is larger than Nedbank based on main bank population, thus more clients accepted Capitec as their main bank than Nedbank. Nedbank on the other hand is still a lot bigger than Capitec if referring to financial lending: Nedbank had a totlal of R187 billoin of loans, and Capitec only had R27.9 billion. Nedbank is also bigger in terms of revenue: Nebabank gained R7.9 billion, and Capitec R1.3 billion in revenue. In the article Adrian Cloete also compare Nedbank vs. Capitec by assets, advances, deposits, and NIR, which should all be taken into view when measuring the size of the banks.

    2)No, advertising is not a sure way to increase market share. And secondly, yes, there are other factors that need to be considered. A product can be advertised to attract or inform customers or maintain or create a brand image, but in the end, other aspects such as the price, packaging, and place all play a roll in how much of the market share a business is holding.

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