Rowan Williams, portfolio manager at Nitrogen Fund Managers, on what the smart money is doing.
Rowan Williams, portfolio manager: Nitrogen Fund ManagersWe like Absa. The banks are in a good space, they’ve managed credit risk in a rising rate environment well so they’re getting the benefit of the endowment effect without the concomitant rise in bad debts.
Absa has a very low rating and it recently completed the placing of the remaining tranche of shares owned by Barclays, so that overhang has now gone away. Historically, it’s had fairly poor execution relative to other banks, partly thanks to the Barclays ownership — Barclays didn’t understand the SA banking environment — and it is quite quickly regaining market share. It also has a lot of potential to mine its existing customer base, which should improve all its business metrics, like noninterest income growth. It’s been a little more aggressive in lending and overall the consumer doesn’t seem to be in a terrible space.
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