Johannesburg- Residual Debt Services (RDS), the old African Bank, on Thursday reported a R945 million loss from operations for 12 months ended September 30, a significant decline from a loss of R6.8 billion the previous year. This comprised a loss for the first half of the year of R987 million and then subsequent to the transaction effective date, a profit of R42 million for the second half of the year.
This was the first update and release of the audited full year financial statements made by RDS, which is under curatorship, following the successful restructuring and launch of the new African Bank Limited in April last year.
The financial results are effectively the combination of the first six months of the financial year, which were prior to the restructuring transaction of African Bank and the second six months of the financial year, which reflect RDS trade after the transaction.
As part of the restructuring transaction, RDS provided a R3 billion indemnity to the new African Bank in respect of any losses that may be incurred in connection with the assets transferred.
The curator said he has not received any claims against the indemnity by African Bank to date.
Curator, Tom Winterboer, said his focus is on collections against the loan book that were not transferred to the new African Bank.
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Collections on this loan book are slightly ahead of expectations, contributing to a decreasing book value.
RDS made a profit for the year of R2.3 billion, compared to a loss of R7.2 billion, after including various once off capital items, one of which includes a gain arising from the transaction of R2.6 billion.
This once off profit represents the difference between the fair value and the carrying values of the assets and liabilities transferred to the new African Bank.
The bank had R4.3 billion worth of assets at 30 September, with unsubordinated liabilities of R5 billion, resulting in negative equity of R4.4 billion.
But RDS repaid the transaction loan of R3.3 billion in full to the South African Reserve Bank in September 2016.
RDS currently has open tax matters with South African Revenue Services (Sars) which primarily relate to the deductibility of historical impairments provisions.
RDS also said it was co-operating fully with the National Credit Regulator (NCR) in its investigation into certain activities of the bank prior to curatorship, in respect of potential reckless lending.