JOHANNESBURG, June 11 (Reuters) – In the glass-walled boardrooms of South Africa’s biggest banks, executives are ramping up efforts to win clients from a once overlooked corporate segment: medium-sized companies that are now too lucrative to ignore.
Faced with growing competition for large corporates and squeezed retail banking margins in a sluggish economy, lenders including Nedbank, Investec, FirstRand’s First National Bank and Standard Bank are targeting the sector with dedicated teams and tailored services.
This market, companies with annual revenue of 100 million rand to around 1.5 billion rand ($6 million to $91 million), spans sectors from manufacturing and mining services to agriculture, retail and logistics. Bank executives say these businesses are often cash-rich, fast-growing and steadier and provide more attractive returns than more volatile retail and small business portfolios.
“This is a strategic growth vector for Nedbank. We’re scaling the operation,” Marlon Davids, the head of mid-corporate coverage at Nedbank’s Business and Commercial Banking unit, told Reuters.
NEDBANK AND INVESTEC RAISE THE STAKES
Nedbank has created a mid-corporate unit with its own credit committees and commercial bankers targeting up to 30% of South Africa’s estimated 3,000 to 3,500 medium-sized companies generating annual revenue of at least 750 million rand, Davids said.
The country’s fourth-largest bank by assets plans to triple the unit’s banker headcount to about 30 from 10, while its client base has already grown 50% since its launch last year.
Investec, a specialist private bank, says banks serving medium-sized companies are generating returns on equity of around 30%, roughly double those of most major lenders.
The sector is dominated by privately or family-owned businesses, often with substantial cash balances looking for a home and transactional banking services.
To tap into that, Investec plans to more than double its mid-corporate client base to 7,000 by 2030, and raise annual revenue from the segment to 3.8 billion rand from 1.7 billion in 2025, said Nick Riley, head of business and commercial banking at Investec.
The bank has invested more than 300 million rand to set up full banking services which it plans to roll out before March 2027, Riley said.
Investec lacked the full day-to-day transactional banking capabilities needed to compete with larger rivals for medium-sized corporate clients.
“In South Africa, we continue to see good client acquisition momentum. We’re starting to see the flywheel really gather momentum,” Investec Group Chief Executive Fani Titi told reporters in May.
FNB, which says it already serves over 20,000 medium-sized companies, combined its mid- and large corporate clients units into a single division in March, allowing it to sell more sophisticated banking products to fast-growing firms.
STANDARD BANK LOOKING ACROSS AFRICA
For Standard Bank, Africa’s largest lender by assets which has an around 28% share of South Africa’s mid-corporate market, the opportunities extend beyond the continent’s most industrialised economy.
The bank sees growth prospects in East and West Africa, where its market share remains below 10%, Bill Blackie, its chief executive of Business and Commercial Banking said at the bank’s March capital markets day.
It estimates that Africa’s mid-corporate segment represents a potential revenue pool of 150 billion rand, with 85% of that in South Africa, Nigeria, Ghana, Kenya, Uganda and Tanzania.
“Today our customers trade more across the continent than they do with any other single trade bloc, be it China or the U.S.,” Blackie told Reuters.
“We’re seeing very high growth rates coming out of those economies.”
The bank is targeting lending growth of about 10% and deposits above 725 billion rand by 2028 in its business and commercial banking division, up from 514 billion rand in 2025.
The intensifying competition is likely to benefit medium-sized companies, analysts said.
“More options should lead to better service levels, more tailored funding solutions and, in some cases, better pricing,” said Keagan Higgins, an investment analyst at Anchor Capital, a boutique wealth and asset management firm.
