South Africa: Emrie Brown prepares for seven years as head of RMB

By Kanika Saigal
Posted on Tuesday, 7 June 2022 15:11

Rand Merchant Bank has announced Emrie Brown CA(SA) as the next CEO, taking over from October 2022. (@RMBCIB/twitter) twitter)
Rand Merchant Bank has announced Emrie Brown CA(SA) as the next CEO, taking over from October 2022. (@RMBCIB/twitter) twitter)

In May this year, RMB announced that head of banking, Emrie Brown, will take over from James Formby as CEO of the investment bank in October. It will be just a couple of months after Formby presents the division’s financial report for the year ending June 2022.

“It gives us time for a smooth transition,” says Brown. “Until then, I will remain in my current position.”

It is a job she will hold for seven years, like Formby before her and Alan Pullinger before him. “It is a different approach compared to other banks in South Africa, but it has served us well in the past,” she says.

“It means that every seven years, a new CEO can bring in fresh thinking and new energy to the role,” says Brown.

“A seven-year rotation means that an incumbent is focused to deliver maximum impact on the organisation during their time at the helm,” she says.

Recession

Brown hopes to lead the bank as it moves from a period of resilience under Covid – with corporates reluctant to borrow and activity generally low – into an era of renewed growth.

In the year-end 2019, profit after tax for RMB in South Africa fell from R8.61bn to R7.94bn. In 2020, it fell again to R.5.91bn before returning to R6.98bn in the year end June 2021.

Meanwhile, profits for the bank from the rest of Africa have remained relatively steady year on year from R2.12bn in 2019 to R2.10bn in 2020 and R3.06bn in 2021. RMB’s business in the rest of Africa now accounts for approximately 30% of total profit for RMB.

Return on equity (ROE) for RMB has also been on an upwards trajectory since falling from 25.3% in June 2018 to 15.4% in June 2020. Figures for ROE in June 2021 were 18.7% in the annual report.

“James [Formby] had a tough time in navigating the impact, but he managed to weather to storm,” says Brown. “So, I think the best thing for the bank is to continue on the same trajectory and take advantage of the growing opportunities that are coming to fruition across the continent as we emerge from the impact of the Covid pandemic,” says Brown.

But for now, there will be no huge changes to the way the bank will do business. “I have been part of the leadership team since being appointed co-head of Investment Banking in 2015 and that team has always worked as a partnership, where we have discussed the strategic direction of the bank over the years,” she says.

“But I will make sure to offer a fresh set of eyes through which we evaluate all business opportunities, how we continue to grow, maintain market leadership in our key geographies, and continue to deliver superior returns for shareholders.

“Our future growth will depend on the opportunities in our key markets. And right now, there are a number of opportunities.”

For Brown, infrastructure development will be a huge theme in the coming years, with a focus on sustainable and renewable energy as well as traditional physical infrastructure to support transport links between African cities and countries.

It’s a really exciting time to be taking over the business.

Indeed, foreign direct investment (FDI) into Africa is making a comeback. According to United Nations Conference on Trade and Development (UNCTAD), FDI into Africa grew 147% to around $97bn in 2021 compared with $39bn in 2020.

This also extends to digital infrastructure. South Africa’s spectrum auctions, which after years of delay finally came to fruition in March this year. “This is clear intent from the government to allow mobile carriers to invest in the system,” says Brown.

“It’s a really exciting time to be taking over the business,” she says.

Capital markets

Brown will lead RMB as South Africa emerges from a debilitating economic recession. In 2021, South Africa’s real GDP growth hit 4.9%, following a contraction of 6.4% the year before.

South Africa’s developed capital markets, however, continued to weather the storm despite the impact of the global pandemic on global markets, and the resulting supply chain crisis that closed business across the globe. And reflecting the current optimism around the economy, credit ratings agency S&P upgraded the sovereign outlook from stable to positive in May.

All in all, we are in pretty good shape. There is a lot to look forward to.

At the same time, findings uncovered by the Zondo Report will hopefully mean that the face of South African politics will change for the better – with a focus on how economic growth will benefit the masses as opposed to an elite, well-connected few.

“One thing that helped us is that SA corporates are not as highly geared [higher debt versus equity] as some of those in other markets, with lower interest rates,” says Brown.

“This meant that our corporates were pretty resilient as we saw some capital flows leave our shores and we were able to withstand some of the economic shocks that have affected other emerging markets.

“And while the Russia-Ukraine war is obviously devastating for all involved, South Africa has actually benefitted, because those emerging market portfolio flows are pivoting away from other emerging markets and are being redirected towards South Africa,” says Brown.

“All in all, we are in pretty good shape. There is a lot to look forward to.”

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