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Johannesburg - Capitec may well prove nimble and innovative but the Postbank is like the new fat kid in the sandbox - you might not want to play with him but if he wants to, he is hard to ignore.
The recent announcement that Postbank has received legislative approval to begin operating as a retail bank should worry Capitec fans who are counting on repeat performances of 2009 and 2010 where the counter delivered whopping returns for shareholders.
The naysayers might argue that a government-run institution has no hope of competing with the innovative model that has been rolled out by Capitec, but remember the airline industry has been saying the same thing about South African Airways (SAA) for years now.
SAA can forget to renew a lease on a couple of its planes, but that does not mean its competitors are going to thump it into the ground in terms of air traffic or competitiveness.
Unlike the rebranded uBank which was launched at the end of 2010, the Postbank is a very serious player with 6 million plus customers, 2400 potential branches and more than R6bn in deposits.
When it lines up a market segment, expect a dog fight for customers.
After chatting to analysts about the listed banking sector, an interesting picture is emerging.
The preferred banking counter appears to be Investec with market commentators pointing to its dividend yield, strength of its asset management business and a sharp increase in domestic and international merger and acquisition activity.
Asset managers at UBS, Vestact and Investec continue to see value in African Bank Investments Limited [JSE:ABL] pointing to its strong balance sheet and dividend yield.
Of the so-called "big four", the technology driven FirstRand [JSE:FSR] group pips Standard Bank Group [JSE:SBK] which is quietly starting to gather some support after the announcement of further cost-cutting.
As RMB Asset Management points out, Standard Bank has on a compound basis grown its net asset value by 18% per annum since 1990.
Absa is tipped as a recovery story in 2012 while Nedbank is not being given the time of day at an operating level.
Sasfin remains an interesting growth play but its fortunes remain closely tied to the strength of the small and medium sized business sectors.
One interesting factor is that the highly regarded team from Cannon Asset Managers quietly accumulated the stock towards the end of 2010.
It may perhaps be a little early to consider the stock a buy as executive director Malcolm Segal unloaded about R1.3m worth of shares at around R37 in late 2010.
On directors' dealings, it once again pays to see what Capitec Bank Holdings [JSE:CPI] directors are doing, especially with the recent rights issue.
Fin24 has taken flak for repeatedly pointing out that Capitec directors were consistent sellers of the stock and the media in general were told that executives were selling shares to free up cash for the recent rights issue.
If that is the case then why was CEO Riaan Stassen selling R1.5m worth of his rights a few days ago?
Retail banking might be a fun metric on which to judge the listed players but it is unlikely to be where the money is made in 2011 as all eyes are now on the institutional and investment banking space.
** The author holds shares in Standard Bank, Abil and Capitec (preference)
- Fin24.com
