Grindrod considers relationships with its customers as the mainstay of the business, hence providing a wide range of personalised products and services through five key business units (Table 1). While a fair level of diversification is seen in its products and revenue. Lending activities accounted for around 44% of Grindrod’s interest and similar income at FY18, with 47% of the loan book exposed to property. Other significant sources of interest and similar income included interest on bank balances and short-term deposits (23%), and investee companies (12%). The bank also earns fee income mainly from its corporate and retail banking activities.
Grindrod Bank Limited (‘Grindrod’; ’the bank’) is relatively small in size, with a modest market share of approximately 0.2% in South Africa’s oligopolistic banking system. The bank offers a broad range of products and services, although a large amount of its lending is skewed towards property. Positively, revenue stability has been good over the last five years. However, we expect some increasing volatility as the recurring fee and commission earned from the SASSA (South Africa Social Security Agency) has started to diminish.