The group said the savings and investment business had surged by 119 percent to R1.5bn from R680 million last year, as retail savings depositors grew to 23 000 from 19 000.
It said average deposits also increased to R80 000 from R25 000 during the period.
“Savings and Investments marketing and African Bank’s increasing diverse physical and digital distribution network, supporting the targeted approach to customers across a broader savings spectrum, continues to yield positive results in the savings and investments business,” the bank said.
The bank was resurrected from its parent, African Bank Limited, when it went bust five years ago.
It opened its doors for business in April 2016, after the monumental collapse of its parent which had a single source of income which was unsecured loans and the fact that it acquired Ellerines in 2007.
Yesterday, it said retail deposits now represented 8 percent of its total funding from 3 percent in 2017.
“This is expected to continue to grow at a significant rate, allowing us to reach our non-wholesale funding target of 25 percent by 2021,” the group said. Last week, African Bank launched its zero monthly fee account, which is dubbed as the cheapest transactional bank account available, giving customers access to up to six accounts with no monthly account fees.
African Bank joined the digital banking market after Sasfin and TymeBank, which are giving the big four traditional banking groups fierce competition.
The bank said 12 000 customers had since opened MyWorld accounts, demonstrating the attractiveness of the offering.
“We are confident that this product will enable us to achieve our target of 2.5 million customers by 2021,” it said.
“The ability to provide a wider, more comprehensive banking offering will attract new customers, which creates more opportunity to promote our savings and investments offerings and attract new personal-loan customers.”
The new digital product offers low fees and competitive interest rates in an increasing competitive market.
Standard Bank also recently launched a new entry-level account, called MyMo, at a monthly cost of R4.95 with R50 free airtime for voice calls or internet access for customers using a Standard Bank SIM card.
African Bank said its profits had risen 19 percent to R533m after tax, as it invested in new businesses, allowing it to diversify during the period under review.
Other highlights were that new business from branches jumped 11 percent to R4.9bn in the six months under review.
Credit disbursements increased by 17 percent to R5.6bn. “Our cost of credit risk continues to decrease, while new credit disbursements have increased against a backdrop of stricter credit underwriting criteria.
“This is also testament to the increased efficiencies between the bank’s distribution network and the alignment of its marketing campaigns,” it said.
Asief Mohamed, the chief investment officer at Aeon Investment Management said African Bank had produced a solid set of results off a low base. “ Return on equity improved to 10.9 percent from 9.6 percent helped by a reduction in credit loss ratio declining to 6.8 percent from 11.1 percent. It remains to be seen if the decline in the credit loss ratio is sustainable,”said Mohamed.