African Bank and holding company African Bank Holdings lifted taxed profit a solid 38% to R736 million in its financial year to September 30 after a year of impressive growth and strong delivery.
The results released yesterday were the first since the bank instituted its ‘Excelerate25’ strategy, launched towards the end of 2021. This strategy was based on five sustainability levers comprising customer satisfaction, social responsibility, environmental protection, inclusivity, and financial resilience.
Chief financial officer Gustav Raubenheimer said in a telephone interview yesterday that an 87% increase in retail disbursements (loans granted to customers) to R14 billion from R7.5bn last year boosted the results. MyWorld transactional balances increased by 54% to R1.4bn.
He said gains also arose from productivity improvements in the disbursement channel, the normalisation of underwriting criteria after this was tightened in 2020 through the Covid-19 pandemic, and the bank wrote its first corporate loan of R1.8bn.
The number of MyWorld active funded accounts grew almost 80% to 712 000. In addition, usage nearly doubled year-on-year with 35 million transactions with a rand value of R45bn.
Raubenheimer said they were concerned about the macroeconomic environment for the new financial year and the bank’s lending criteria had tightened somewhat in the past few months, so he did not expect retail disbursements would grow as much in the new financial year.
The bank, however, remained well capitalised with a capital adequacy ratio of 43%.
He said some new products were likely to be launched, particularly into the small- and medium-sized business market, while African Bank’s acquisitions of Grindrod Bank, as well as the assets and liabilities of Ubank, became effective on November 1. These transactions were not reflected in the latest results.
However, processes to integrate the business banking operations had begun, while Ubank would fall under African Bank’s consumer banking operations, said Raubenheimer.
CEO Kennedy Bungane said in a statement: “The results show the bank’s continuing growth trajectory and increasing penetration into the retail banking market, underpinned by our driving philosophy of building a South African bank ... for the people, by the people and serving the people.”
He said the results also showed African Bank was committed to building a bank that would advance the lives of South Africans across all walks of life, “as well as accelerate the building of a customer-centric, digital, and data-enabled business that will be scalable, diversified and sustainable with a compelling listing proposition.”
Net customer advances balances grew by 38% to R22.67bn, retail savings and investment customer deposits increased by 15% to R10.8bn, and transactional MyWorld balances increased by 54% to R1.4bn.
Bungane said there would be a focus on strategy integration with Grindrod Bank in the year ahead, while there were plans to leverage Ubank’s unique market position in the mining sector.
“Both acquisitions present important growth and development opportunities for impacted staff. We will also remain laser-focused on the execution of ‘Excelerate25’ with an updated operating model for business banking and consumer banking and we continue to prepare for an initial public offering that includes an engagement phase with strategic business partners,” said Bungane.
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