Africanbank Group reports half-year profit and eyes further opportunities

Africanbank CEO Kennedy Bungane said the interim results indicated a bank group that was resilient and delivering on its strategy. Picture: Supplied

Africanbank CEO Kennedy Bungane said the interim results indicated a bank group that was resilient and delivering on its strategy. Picture: Supplied

Published May 31, 2024


Africanbank Group turned around last year’s small interim taxed loss into a profit in the six months to March 31 and it is on track for a full-year profit, CFO Anbann Chetti said yesterday.

Net taxed profit came to R2.3 million compared with the R43m net loss reported at the same time last year. Diversification and scaling initiatives saw 5.7 million customers serviced across all its platforms, a 38% increase. Impairments fell 40%.

Interviewed at the release of the results, Chetti said the bank might list over the medium term, but currently initiatives involving the bank’s shares were aimed at “giving the bank back to its people, in line with the aims of its founders”.

Included in these initiatives was the ceding of 10% of the shares to some 4000 staff, and there may well be other initiatives to strategic partners or stakeholders from a BEE perspective in the future, he said.

He also did not rule out, given the strong liquidity position, the possibility for further acquisitions, but these would need to fit tightly into the bank’s strategy.

CEO Kennedy Bungane said the results reflected a turnaround, in contrast to their position at the same time last year, despite operating in a tough economic climate.

Growth in unsecured lending was subdued because the bank continued its journey to de-risk and diversify its business, by offering additional secured lending products and enhancing its credit scoring methodology.

The groups 'Excelerate25' strategy was focused building a fully fledged bank with both consumer and business banking divisions, and to create a business with multiple revenue streams.

The integration of Grindrod Bank into the business banking division received regulatory approval in March.

The acquisition of Sasfin's capital equipment and commercial property finance operations was awaiting regulatory approval. The Sasfin acquisition was expected to be completed in the second half.

“We remain positive about opportunities to provide enhanced services to under-served small, medium and micro enterprises and entrepreneurs,” said Bungane.

The consumer banking division expanded its products and services with the piloting of home loans to staff and the financing of tech-deals, including finance for handset subscriptions offered by the telecoms industry.

“Our retail customer base is growing, attracted by our affordable banking fees, the unique transactional banking opportunities of our MyWORLD account, and our superior customer service complemented with competitive savings and investment rates, and insurance products,” said Bungane.

The diversification of the balance sheet was making headway following the integration of last year's acquisitions, and consisting of net advances of R32.7 billion, 1% up on last year, with secured business banking loans making up 37% of loans to customers.

Chetti said they wished to increase this percentage to 40% and even beyond that, in the future.

The funding base further diversified with business and retail deposits making up 91% (85%) of total funding of R33.5bn (R33.9bn). The bank had cash reserves, excluding statutory assets, of R7.9bn (R8.5bn).

Interest income fell by 10% to R3.5bn, mainly as retail unsecured lending advances reduced and negatively impacted loan disbursements.

Insurance profit fell by 8% to R313m (R340m). Operating expenses were well contained with a 3% reduction over the prior period.

The credit impairment charge improved by 40% to R1.36bn (R2.24bn), due to the enhanced credit granting criteria and improvements to their collections and rehabilitation processes.