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ABL/ABLP - ABIL - Trading update for the third quarter ended 30 June 2010
AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registered Bank controlling company)
(Registration number 1946/021193/06)
(Ordinary share code: ABL) & (ISIN: ZAE000030060)
(Preference share code: ABLP) & (ISIN: ZAE000065215)
("ABIL" or "the group")
TRADING UPDATE FOR THE THIRD QUARTER ENDED 30 JUNE 2010
ABIL issues quarterly updates in order to provide investors with timely insights
into strategic and operational performance trends. These updates cover certain
key metrics but are not in themselves indicators of the group`s profitability.
The quarter ended 30 June 2010 was characterised by comparatively stable trading
conditions, with a stronger sales trend evident and a relatively unchanged
overall risk profile. The group expects a steady performance in the last quarter
of the year, which is traditionally a muted trading period.
African Bank
Sales for the quarter ended June 2010 increased by 29%, resulting in sales
growth of 6% for the nine months ended June 2010. While some of the better
sales performance relates to general buoyancy in the market in the lead up to
the World Cup, it is clear that the reinvigoration of the front-end, combined
with product enhancements has also contributed.
Relative to March 2010, average loan size increased by 9% to R8 569 and term by
5% to 43 months. The number of loans showed positive growth relative to the
previous quarter, but remained lower than last year. The Bank achieved a steady
increase in the number of new customers it attracts, notably within the credit
card portfolio.
Gross advances increased by 13% to R22,9 billion on a year-to-date basis, or 17%
annualised. The impact of the stronger sales growth on the loan book was diluted
to an extent by higher write-offs and a lower level of loan rehabilitations. In
addition, the timing of the acceleration in sales, coming during the latter part
of the current financial year, suggests that the benefit will only be realised
more fully in the 2011 financial year.
Insurance claims remained fairly elevated, but off previous peaks. This affected
overall income yields which continued to decline, but benefited the bad debt
charge. The impact of suspended interest and in duplum on yields has however
started to moderate. The sales mix continued to be skewed towards lower risk
clients.
Growth in operating costs was constant relative to the interim period, and the
Bank remains on track to achieve its efficiency target for the financial year.
Asset quality remained stable. Non-performing loans (NPLs) as percentage of
advances reduced modestly, while NPL coverage remained steady relative to the
interim stage.
Ellerines
The quarter was characterised by strong merchandise sales growth in the run-up
to the World Cup. Sales for quarter ended June 2010 of R1,1 billion increased
by 13% year-on-year, while sales for the nine months were R3,4 billion (Q3 2009:
R3,2 billion), an increase of 5% over the prior comparable period, or 9% on a
like-for-like basis.
On a brand basis, Ellerines built on the positive sales momentum previously
reported, with comparable sales growth of 7% for the nine months ended June
2010. The rate of sales growth at Beares, Geen & Richards and Dial-a-bed was
largely in line with that reported at the interim stage, while Furniture City
achieved a small turnaround. Wetherlys continued to underperform. The credit
sales mix was steady at 59%.
Gross margins firmed over the period, while operating costs declined further as
the various integration initiatives continued to bear fruit. All productivity
measurements continued to improve on the back of the increased sales. Stock turn
remained steady.
Gross advances grew by 11% in the nine months ended June 2010, or 15% annualised
to R5,5 billion. Approval rates and average deal size continued to increase on
the African Bank credit origination platform. A total of R1,2 billion of loans
has now been written on this platform.
The financial services yield remained substantially lower than the previous
financial year as a result of price reductions and the effect of interest
suspension and in duplum, with the latter impact gradually starting to diminish.
The quality of the advances book improved further, as evidenced by a lower bad
debt charge, lower write-offs and declining NPLs. The business experienced some
collection disruptions during the World Cup, but these were not material enough
to offset the gains made in previous months.
The integration of Ellerines Financial Services into African Bank is progressing
well and remains on track for completion by year-end.
On behalf of the board
Midrand
4 August 2010
This announcement, together with a short presentation, is available on the
African Bank Investments Limited website at http://www.abil.co.za.
ABIL will hold a conference call on Wednesday, 4 August 2010 for interested
parties. The conference call will take the form of a short overview of the
quarter, followed by questions. A slide presentation covering the overview will
be available for download prior to the call on www.abil.co.za
Time 16:00 (SA time)
LIVE CALL PLAYBACK (available for 48
hours)
South Africa & Other
Toll 011 535 3600 South Africa & Other
011 305 2030
Code 2134#
USA
Toll-free 1800 860 2442 USA
1 412 317 0088
UK
Toll-free 0800 917 7042 UK
0808 234 6771
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 04/08/2010 07:05:14 Supplied by www.sharenet.co.za
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