South Africa's biggest banks have found a new prize, and it isn't the blue chips at the top of the JSE. Lenders including Nedbank, Investec, FNB and Standard Bank are scrambling to win over medium-sized companies — businesses with annual revenue of roughly R100 million to R1.5 billion — a segment they largely ignored for years.
The logic is simple. Competition for large corporates is fierce, retail margins are being squeezed in a sluggish economy, and mid-sized firms — spanning manufacturing, mining services, agriculture, retail and logistics — tend to be cash-rich, fast-growing and steadier than small business or retail portfolios.
Dedicated teams, serious money
Nedbank has built a mid-corporate unit with its own credit committees and plans to triple its banker headcount from 10 to about 30. It is targeting up to 30% of the estimated 3,000 to 3,500 South African companies generating annual revenue of at least R750 million, and says its client base has already grown 50% since the unit launched last year.
Investec is going further. The specialist bank says lenders serving mid-sized companies are earning returns on equity of around 30% — roughly double those of most major banks. It has invested more than R300 million to build full transactional banking services, due to roll out before March 2027, and wants to more than double its mid-corporate client base to 7,000 by 2030, lifting annual segment revenue from R1.7 billion to R3.8 billion.
FNB, which already serves more than 20,000 medium-sized companies, merged its mid- and large-corporate units into a single division in March. Standard Bank, with about 28% of the local mid-corporate market, is looking beyond South Africa entirely: it estimates Africa's mid-corporate segment is a R150 billion revenue pool and is targeting deposits above R725 billion in its business banking division by 2028.
Good news for the businesses
For the companies being courted, the bidding war should pay off. Analysts expect more options to translate into better service, more tailored funding and, in some cases, sharper pricing. After years of fighting for attention behind the corporate giants, South Africa's mid-sized businesses are suddenly the belle of the banking ball.
Compiled by Business Bagel from reporting by CNBC Africa (Reuters).
