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ABL - African Bank Investments - Trading update for the first quarter ended 31
December 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 FIRST QUARTER ENDED 31 DECEMBER 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.
Strong operational performance in the quarter ended 31 December 2010 was
driven by several new credit and retail product offerings, a substantial
increase in the African Bank footprint through kiosks and branches within
Ellerines (EHL) stores, as well as high levels of commitment from our staff.
This performance was also supported by improving external trading conditions.
African Bank
Combined credit sales for African Bank and EHL for the quarter increased by
59% to R5,5 billion (Q1 2010: R3,5 billion). African Bank credit sales grew
by 63% to R4,3 billion, while total credit sales at EHL increased by 29% to
R1,2 billion, the latter supported by a growing contribution from personal
loans.
The growth in African Bank originated sales was achieved through a 26%
increase in the volume of new loans granted, particularly to lower risk
segments, and a 29% higher average loan size of R9 800. Average loan term
increased from 39 months to 44 months.
African Bank added 118 000 new clients during the quarter under review, an
increase of 41% on the 83 000 new clients it added in the previous comparable
period. The recently launched `payment break` and `interest buster` products
were particularly effective in attracting new clients to the group. EHL
increased its new credit customers by 18% for the quarter to 140 000.
Combined gross advances increased by 12% over the three month period to R32,7
billion. It should be noted that the December quarter is traditionally the
strongest in terms of sales, and therefore may not be representative of the
performance expected for the full year. On a year-to-date basis, African Bank
advances increased by 10% to R26,8 billion, while EHL advances grew by 17% to
R5,9 billion.
Yields remained steady during the period, while operating cost growth was
slightly elevated relative to budget, given the strong increase in sales and
general activity within the group.
Asset quality continued to improve, as evidenced by vintages that are down
from the peak levels of the quarter ending 31 December 2008. Non-performing
loans (NPLs) as a percentage of advances declined modestly on the back of the
faster growth in performing loans. NPL coverage was steady.
Ellerine Holdings Limited
Merchandise sales for the quarter were R1,5 billion, 8% higher than the
previous comparable period. On a like-for-like basis in terms of trading
space, merchandise sales grew by 12%. The merchandise sales credit mix
increased from 60% in September 2010 to 66% in December 2010.
Ellerines, the largest brand within the portfolio, increased its merchandise
sales by 20%. However systems changes implemented in September 2010 and a
relatively high base from the previous year had a negative impact on sales
growth at Beares (up 5%) and Geen & Richards (up 1%).
Dial-a-Bed grew sales by 12%, while Furniture City (down 10%) was affected by
a fire at its biggest store. The sales performance of Wetherlys (down 17%)
continued to disappoint, given issues around its store size and location
strategy, amongst others.
Gross margins firmed slightly, while stock turns and obsolescent stock showed
further improvement over the period. Category expansion through new imported
furniture ranges, computers and the TEK private label has also proven
positive.
Outlook
Innovation and renewed energy have resulted in strong levels of activity in
the first quarter, and given the current impetus in the business, the group
remains on track to achieve its previously communicated financial objectives
for 2011.
The information provided in this update is not an earnings forecast and has
not been reviewed and reported on by the Abil`s external auditors.
On behalf of the board
Midrand
7 February 2011
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 Monday, 7 February 2011 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 South Africa & Other
Toll 011 535 3600 011 305 2030
Code 2134#
USA USA
Toll-free 1800 860 2442 1 412 317 0088
UK UK
Toll-free 0800 917 7042 0808 234 6771
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 07/02/2011 07:05:00 Supplied by www.sharenet.co.za
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