African Bank warns of H1 lossComment on this story
Johannesburg - South African unsecured lender African Bank Investments said on Friday it anticipated to swing to a first-half loss of no more than R3.3 billion as non-performing loans ballooned.
The bank said its headline loss per share would be between 239 and 254 cents in the six months to end March, compared with a restated headline earnings of 62.3 cents last year.
The bank widely known as Abil said its banking unit would book a loss of up to R2 billion, after experiencing higher non-performing loans (NPLs) and increasing provisions for loans.
Non-performing loans for business written before July 2013 had ballooned, bringing total NPLs to some R6 billion, R600 million more than had been anticipated.
Abil said it had also made a decision to increase its general provision for credit impairment for performing loans by approximately R2.5 billion.
South African banks have scaled back on the risky yet lucrative unsecured loans that helped them pump up profits in the last few years.
Abil has been worst hit among its peers because of its aggressive lending to low-income earners and also by its retail model of selling furniture through credit.
Its furniture Ellerines is expected to book a loss of up to R1.3 billion as customers scale back on purchases.
Abil's shares haemorrhaged value in early trade, dropping nearly 11 percent. It has since clawed back some ground and was down 7 percent at 11.60 rand at 0726GMT.