African Bank slides to R4.4bn lossComment on this story
Johannesburg - African Bank Investments, South Africa’s largest provider of credit not backed by assets, slid to a fiscal first-half loss after bad debts rose more than forecast and it increased provisions for loans that may sour.
Abil fell to a net loss of 4.38 billion ran in the six months through March from restated net income of 602 million rand a year earlier, the Johannesburg-based lender said in a statement today.
It also posted a loss per share excluding one-time items of 2.41 rand compared with restated earnings of 62.3 cents a year earlier.
South African consumers are under pressure as inflation and unemployment rises because of sluggish economic growth.
This is making it harder for African Bank customers to repay unsecured loans and obtain new credit, while crimping sales at Abil’s furniture retailer, Ellerine.
Abil withheld its ordinary interim dividend and will give more guidance on its payout cover when releasing full-year earnings, the company said.
New business volumes, in line with levels seen in 2011, won’t grow “significantly” over the next two years after the lender reduced the maximum term for a loan to 60 months from 84 months, Abil said.
“The group is only at the beginning of a turnaround that will take time to return to acceptable shareholder returns.”
Abil is South Africa’s worst-performing bank stock this year, having dropped 30 percent.
It rose 0.2 percent to 8.45 rand on May 16. - Bloomberg News