African Bank grows its retail deposits by 90% to R689m

DURBAN – African Bank Holdings (ABH) said yesterday that it had grown its retail deposits by 90percent to R689million in the six months to end March by actively diversifying its funding base.

The bank said this retail deposit base now comprised more than 13000 depositors with an average deposit of just more than R52000, constituting 3percent of the funding for the bank. The bank strives to offer the best rates across the investment curve, including 10.5percent nominal annual compounded annually rate for its 5-year fixed-term product.

Chief executive Basani Maluleke said the bank had made good progress on their strategy to right-size and modernise the branch network and digitise the business.

“The growth in both our lending and retail deposit books, coupled with the launch of our ‘My World’ transactional banking product to our staff are strong indicators of the execution of our strategy. As the competitive landscape intensifies, we believe we have the right team to deliver acceptable returns to all our stakeholders and real value to our target market,” Maluleke said.

ABH is an unlisted, registered bank controlling company under the Banks Act. The shares in ABH are privately held by the South African Reserve Bank, the Government Employees’ Pension Fund, Barclays Africa Group, Capitec Bank, FirstRand Bank, Investec Bank, Nedbank and Standard Bank.

During the period, the group produced a 42percent increase in net profit before tax and foreign exchange losses to R715m, up from R501m as compared to last year. It said the increase was primarily due to a lower credit impairment charge as a result of a generally lower credit risk appetite and better collections, an increase in insurance profit and lower net interest charge due to debt buy backs.

Contained

Operating costs for the period were well contained, edging only 4percent higher to R1.27billion, primarily as a result of a 3percent increase in core costs and spend on the transactional banking roll out.

African Bank increased its new loan and card business by 9percent to R4.79bn, up from R4.41bn and it continued to focus on lower risk customers, disbursing more than 80percent of all advances to this group.

“These customers typically qualify for larger loans over longer terms. These disbursements continue to show better risk emergence. Evidence of better credit risk emergence can be seen in the impairment loss ratio improving to 11.1percent from 13.8percent as compared to the first half of 2017,” the group said.

The bank said 33percent of all loans issued during the period were offered to new customers, up from 28percent as compared to last year. Cash reserves, including surplus liquid assets as at the end of March 2018 amounted to R8.6bn.

ABH’s subsidiary African Bank Limited also posted 48.19percent increase in operating profit to R123m, up from R83m as compared to last year.

– BUSINESS REPORT