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ABKI - Release of Unaudited Interim Results for African Bank and Related Group Info for 6 Months Ended 31 March 2023
AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registered Bank)
(Registration No. 2014/176899/06)
LEI: 2549008X8SL1B1J86F98
Company code: ABKI
(the “Bank” or “African Bank”)
RELEASE OF THE UNAUDITED INTERIM FINANCIAL RESULTS FOR AFRICAN BANK LIMITED, AND
RELATED GROUP INFORMATION FOR THE SIX MONTHS ENDED 31 MARCH 2023
African Bank is pleased to announce that the Bank and its holding company, African Bank Holdings
Limited (“ABH” or “ABH Group” or the “Group”), released their unaudited interim financial
statements for the six months ended 31 March 2023 (“H1 23”) (“results” and “ABH consolidated
results”, respectively) today. The prior year comparative interim financial statements are for the
six months ended 31 March 2022 (“H1 22”). The more comprehensive ABH Group consolidated
results are addressed first, followed by the Bank’s consolidated results.
ABH Group consolidated results – a changed and diversified banking Group
Eighteen months ago, the ABH Group adopted our audacious Excelerate25 strategy with the aim
of pivoting from a purely unsecured lending business to a fully-fledged consumer and business
banking business. The H1 23 interim results, at the halfway mark of this strategic journey, reveal
that we have made great strides in delivering on our Excelerate25 strategy, and is a markedly
different banking Group to the one we were a year ago.
In the past 6 months, African Bank has acquired both Grindrod Bank and the assets and liabilities
of Ubank in a landmark development that provides further impetus to the Group’s accelerated
growth trajectory. The Grindrod Bank acquisition enables the Bank to stride confidently into the
business banking space. It’s an area that, we believe, holds huge potential, particularly in the
under-served SMME market. Our entry into the business banking space heralds the return to our
original mandate, which was to support the ambitions of entrepreneurs. It is an ideal which
underlines our commitment to making a tangible difference in the lives of our people, especially
now as our country grapples with issues of high unemployment, loadshedding, and economic
stagnation.
Our retail Consumer Banking division has also been bolstered with the successful acquisition of
Ubank’s assets and liabilities. The Ubank operations have been integrated into the Consumer
Banking operations and has already turned from a loss-making operation to breaking even.
With the integration of Grindrod Bank and UBank into the Group nearing completion, these
transformational acquisitions will now form the foundation from which the new enlarged Group is
poised to springboard its growth aspirations and further diversify its customer offerings and
customer base. The previous three cultures have now been merged, with all staff having been
successfully integrated.
The newly merged and integrated Group is now a changed and diversified banking business, with
a significantly larger and stronger balance sheet consisting of:
• A net advances book of R32.4 billion (H1 22: R19.6 billion),
• A more diversified funding base totalling R33.9 billion (H1 22: R15.9 billion), with a lower
overall cost of funding,
• Robust liquidity and cash reserves totalling R8.6 billion (H1 22: R4.8 billion), and
• A strong optimised capital position following the diversification benefits from the
acquisitions, with total capital adequacy of 29.4% (H1 22: 45.8%), exceeding regulatory and
internal minimums.
As a result of the enlarged consumer and business banking operations, the Group delivered
positively on the following key elements:
• Growing interest revenue earned to R3 914 million (H1 22: R2 716 million), with a net
interest margin ratio of 11.7% (H1 22: 14.1%),
• Cost of funding reduced from 7.7% to 7.4%, benefiting from a more diversified deposit
product and customer mix,
• Operating income before credit impairments growing by 47% to R3 995 million (H1 22:
R2 722 million),
• Accelerated insurance profits from insurance captive arrangements, increasing by 273% to
R339 million (H1 22: R91 million),
• Effective operating cost containment despite the higher inflationary environment and once
off integration costs, resulting in a marginally higher cost to income ratio of 58.0% (H1 22:
55.7%),
• An improvement in non-interest income of 109% to R668 million (H1 22: R320 million), and
• Our Excelerate25 strategy, which envisages building a customer-centric, digital and data
enabled business that is scalable, diversified, and sustainable, with a compelling listing
proposition.
The ABH Group has changed and evolved from an unsecured loan granting business into a bank
that has diversified and now services 4.2 million customers on all Group platforms, up 193% from
1.4 million customers a year ago. Of these 4.2 million customers, 115 thousand are investing in
our attractive savings products (up 52% from a year ago), 1.2 million are using the functional and
user friendly MyWORLD transactional banking accounts (up 101% from a year ago), 2.2 million
access products provided through our alliance partner networks consisting of Shoprite Checkers,
Lesaka and MTN’s Momo (new to the Group), 1.2 million have taken out loans and credit cards to
improve their lives (up 5% from a year ago), 95 thousand have acquired funeral policies (up 2%
from a year ago), while 20 thousand business customer transact with the Group (new to the Group)
across investments and secured loans. Our customer-centric, digital focus has enabled an 80%
increase in the usage of our transactional accounts, with 26.1 million transactions (H1 22: 14.5
million) having been processed in the 6-month period, representing a 52% increase in transactional
value to R29.7 billion (H1 22: R19.6 billion).
The current reporting period’s results were negatively impacted as the Consumer Banking
customer came under severe economic pressure, brought about by the rapid rise in food prices,
transport inflation and the loadshedding energy crisis. This resulted in the Consumer Banking
division’s credit impairment charge rising considerably, culminating in a rise in the Group credit
loss ratio to 11.1% (H1 22: 4.8%). This contributed to the Group reporting a net loss after tax of
R44 million (H1 22: R372 million profit) for H1 23.
The Group anticipates returning to profitability when we report our full year results to 30
September 2023 (“FY23”). The second half of FY23 (“H2 23”) will continue with a laser focus on
the Consumer Banking’s lending portfolio to ensure that the performance of this book improves
during H2 23 following enhancements in our credit lending criteria that takes cognisance of the
tough operating environment. In the Business Banking segment, the key focus is on loan book and
transactional base growth. Growing the transactional base will be achieved by conversion of new
customers to primary customers, increasing MyWORLD, card usage and growth in the business
banking transactional offering. Furthermore, ensuring the successful integration of both
acquisitions is key, which includes unlocking of the UBank customer base through the launch of
our Zwakala campaign and the development of product combinations to improve cross-sell.
As the Group looks towards the future, we remain focused on driving sustainable growth,
cultivating strong relationships with our clients, and expanding our reach into new markets. We
are confident in our ability to maintain our position as a trusted banking partner for our customers.
African Bank results
The African Bank’s consolidated Interim Financial Statements represent the financial position
and financial results of African Bank Limited, its 100% directly held subsidiary (Grindrod
Financial Holdings Limited) and its 100% indirectly held subsidiaries.
African Bank has also successfully integrated the assets and liabilities of Ubank into its
operations, with effect from 1 November 2022. Aside from this inorganic growth, the Bank has
also grown organically, matching the disbursements of the comparable period last year. The
intentional tighten of credit criteria has resulted in loans and advances being disbursed on a
conservative basis, significantly lower than that of the second half of FY22.
Over this reporting period, African Bank has performed well, with improvements in its net interest
margin and non-interest revenue. However, its credit impairment charge has spiked as a result of
the tough economic climate which continues to negatively affect certain customers’ affordability
and ability to meet their loan payment obligations.
The African Bank consolidated entity made a net loss after tax of R390 million for the reporting
period. See the results publication material below for more detail.
Restatement of the prior period comparative numbers in the African Bank results and ABH
consolidated results
In the African Bank results and ABH consolidated interim results for the six months ended 31 March
2022, the deposits with the SARB were previously included in regulatory deposits and sovereign
debt securities in the statement of financial position (“SFP”). This has now been reclassified to
cash and cash equivalents in the SFP.
Results publication material
The following published documents are accessible on African Bank’s website at
www.africanbank.co.za under the “Investors/Financial Reporting” section:
1. African Bank Holdings Limited unaudited group consolidated interim financial statements for
the six-months ended 31 March 2023;
2. African Bank Holdings Limited group investor presentation and interim commentary booklet;
3. African Bank Limited unaudited consolidated interim financial statements for the six-months
ended 31 March 2023; and
4. African Bank Limited and African Bank Holdings Limited Basel Pillar III Disclosure documents
as at 31 March 2023.
Webcast details, presentation material and playback facility
Interested parties are invited to register for a webcast during which Kennedy Bungane, ABH Group
CEO, and several executives, will take participants through the ABH consolidated interim results.
Details of the webcast are:
Date Wednesday, 7 June 2023
Time 10h00 SAST/CAT
Web pre-registration Interested parties are requested to pre-register for this
webcast Click here and follow the instructions provided.
A recording of the webcast will be available on the Bank’s website at www.africanbank.co.za
under “Investors/Financial Reporting”.
7 June 2023
Debt Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 07-06-2023 08:55:00
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