African Bank Limited reviewed interim financial statements for the six months ended 31 March 2015 AFRICAN BANK LIMITED (Incorporated in the Republic of South Africa) (Registered bank) (Registration number 1975/002526/06) Company code: BIABL (“African Bank” or “the Bank”) African Bank Limited reviewed interim financial statements for the six months ended 31 March 2015 Features: - Loss of R2.8 billion (2014: R5.9 billion restated) – in line with trading update issued on 11 June 2015 - Credit impairment charge of R5.4 billion (2014: R8.5 billion restated) Stakeholders are referred to the statement regarding the Curatorship of African Bank ("the Curatorship") made by the then Governor of the South African Reserve Bank ("SARB"), Ms. Gill Marcus, on 10 August 2014 ("the SARB statement") and to the SENS announcements released by African Bank Investments Limited ("ABIL") and African Bank on 26 September 2014, 10 December 2014, 3 March 2015 and 31 March 2015, and by African Bank on 28 and 29 May 2015 ("the Restructuring SENS Announcements") and the announcement on 11 June 2015 (“the June 2015 Curatorship update”). The SARB statement confirmed that Mr. Tom Winterboer was appointed as Curator of African Bank ("the Curator") in terms of the Banks Act No. 94 of 1990 (as amended) on 10 August 2014. At the same time the SARB statement set out a proposal for the restructuring of African Bank, which entailed the creation of a new "Good Bank" ("the Good Bank Restructuring Proposal"). Further detail about the Good Bank Restructuring Proposal has been communicated to stakeholders in the Restructuring SENS Announcements. Following the June 2015 Curatorship update, which included a trading update for the six months to 31 March 2015, the Curator today publishes the reviewed financial results for the six months ended 31 March 2015. Financial results for the six months ended 31 March 2015 The loss for the six months decreased by 53% from the prior period to R2 787 million (2014: R5 892 million restated). The loss for the six months to 31 March 2014 has now been restated to R5 892 million compared to a previously reported loss of R2 716 million. Detailed explanations regarding the restatements are made in the notes to the reviewed financial statements for the six months ended 31 March 2015, available at http://africanbank.investoreports.com. Earnings were negatively impacted by a declining advances book as a result of lower monthly disbursements and the paydown of loans which decreased income from operations by 20% from the prior period to R6 216 million (2014: R7 729 million restated). The credit impairment charge decreased by 37% from the prior period to R5 422 million (2014: R8 541 million restated). The comparative charge was heightened as a result of the adjustments made to provisioning described in the reviewed interim financial statements for the six months ended 31 March 2014, and the restatements as described in this set of interim reviewed financial statements. The current year’s impairment charge was negatively impacted by the deterioration in credit quality in the existing legacy advances book. Extensive changes to the provisioning methodology described in the audited annual financial statements for the year ended 30 September 2014 and the supplementary information released with the statements, resulted in increased provisioning coverage as at that date. These provisioning levels have been maintained as at 31 March 2015 and are shown together with the corresponding provisioning levels as at 30 September 2014 below. Advances Category Impairment Coverage Impairment Coverage 31 March 2015 30 September 2014 Neither past due nor specifically impaired 1.7% 1.7% Past due and subject to collective impairment 36.5% 36.9% Specifically impaired 80.0% 79.8% Total gross advances 38.4% 35.3% Operating costs increased by 4% to R1 380 million from the prior period (2014: R1 323 million), primarily due to the increased costs of curatorship (including restructuring, legal and advisory costs), offset to some extent by a lower cost base through natural attrition of staff and specific cost control measures implemented by management. Interest expense reduced by 5% to R2 282 million from the prior period (2014: R2 400 million), due to slightly lower average liability balances compared to the comparative period. Current and deferred taxation at R nil was down from the prior period (2014: R1 592 million charge restated). Due to the losses in the six months to 31 March 2014 and the previous financial year ended 30 September 2013, and the expectation that losses will persist for the near future, the Bank deemed it improbable that sufficient taxable profit will be available against which the deferred tax asset will be recoverable. The resultant reversal of the previously reported tax credit and impairment of the tax assets, as at 31 March 2014, has resulted in the restatement of the taxation charge. The Curator remains of the view that losses will persist for the foreseeable future and accordingly has not raised a deferred tax credit in the income statement and deferred tax asset on the balance sheet in respect of the six months ended 31 March 2015. While these results are disappointing, they are in line with expectations and the Curator reminds stakeholders that the restoration to profitability and subsequent achievement of acceptable investor returns in “Good Bank” will take time, effort and commitment. The information in this announcement has been extracted from the reviewed interim financial statements for the six months ended 31 March 2015, however this announcement has not been reviewed by the external auditors. On behalf of the Curator of the Bank Midrand 26 June 2015 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Footnote : T Winterboer was appointed as Curator of African Bank Limited on 10 August 2014 by the Minister of Finance of the Republic of South Africa and pursuant to the Banks Act No. 94 of 1990 (as amended) to manage the affairs of African Bank Limited subject to the supervision of the Registrar of Banks. Please note that Mr. Winterboer acts in the aforesaid capacity. Date: 26/06/2015 08:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.