African Bank Unveils Impressive Interim Results, Surges Ahead with Strategic Acquisitions and Diversification

African Bank Limited
  • African Bank releases unaudited interim financial results for H1 2023, showcasing transformative growth.
  • Acquisition of Grindrod Bank and Ubank assets strengthens African Bank’s position in business and consumer banking sectors.
  • Despite economic challenges, African Bank remains focused on sustainable growth and profitability, targeting enhanced lending portfolio and customer base expansion.

African Bank Limited announced the release of its unaudited interim financial results for the six months ended on March 31, 2023. The results highlight the bank’s significant progress in executing its strategic plan, including the acquisition of Grindrod Bank and the assets and liabilities of Ubank. These transformative moves have positioned African Bank as a changed and diversified banking group, expanding its presence in both the business and consumer banking sectors.

Under its audacious Excelerate25 strategy, initiated eighteen months ago, African Bank has successfully transitioned from a purely unsecured lending business to a full-fledged consumer and business banking institution. The interim results for H1 23 demonstrate the bank’s commitment to delivering on its strategic objectives and its determination to make a tangible difference in the lives of its customers.

The acquisition of Grindrod Bank has allowed African Bank to enter the business banking space, particularly targeting the underserved small, medium, and micro enterprises (SMME) market. By returning to its original mandate of supporting entrepreneurial ambitions, African Bank aims to contribute to the growth and development of businesses in a challenging economic environment.

Furthermore, the successful integration of Ubank’s assets and liabilities has strengthened African Bank’s retail Consumer Banking division. The integration has already resulted in a positive turnaround for the previously loss-making operation, now breaking even. These strategic acquisitions provide a solid foundation for African Bank’s future growth aspirations and offer opportunities for diversification of its customer offerings and base.

The newly merged and integrated African Bank Group presents an enhanced balance sheet with a net advances book of R32.4 billion, a more diversified funding base of R33.9 billion, robust liquidity and cash reserves totaling R8.6 billion, and a strong capital position. The Group has experienced positive growth in interest revenue, insurance profits, non-interest income, and transactional value. With a customer-centric, digital focus, African Bank has seen a significant increase in the usage of its transactional accounts, processing 26.1 million transactions valued at R29.7 billion during the six-month period.

However, the Group’s credit impairment charge was negatively affected by the economic pressures faced by its consumer banking customers. Rising food prices, transport inflation, and the load shedding energy crisis resulted in an increase in the Group credit loss ratio to 11.1%. Consequently, African Bank reported a net loss after tax of R44 million for H1 23, compared to a profit of R372 million in the previous year.

Looking ahead, African Bank remains optimistic about returning to profitability for the full fiscal year ending on September 30, 2023 (FY23). The bank will focus on improving the performance of its lending portfolio in the Consumer Banking segment, while also targeting loan book and transactional base growth in the Business Banking segment. Successful integration of the acquisitions and expansion of cross-selling opportunities will be prioritized.

The release of the unaudited interim financial results showcases African Bank’s transformation into a diversified banking business, catering to 4.2 million customers across various platforms, marking a substantial increase from 1.4 million customers a year ago. The bank’s commitment to sustainable growth, strong client relationships, and expanding market reach positions it as a trusted banking partner for its customers.

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