ABIL suffers severe losses in 2013 FY - CNBC Africa

ABIL suffers severe losses in 2013 FY

Earnings

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Money down the drain. PHOTO: Getty Images.

The group, also known as ABIL, had made a 1.2 billion rand economic profit in the previous comparative year.

“Financial year 2013 was a particularly tough year for the ABIL group,” the company said in a statement.

“Economic conditions in South Africa continued to be challenging during the past financial year, characterised by lower consumer confidence, pressure on disposable incomes, higher levels of indebtedness and labour market unrest in certain industries.”

Headline earnings declined by 88 per cent to 365 million rand from 3 billion rand in the previous comparative year.

Headline earnings per share also decreased by 88 per cent to 45.1 cents from 378.2 cents.

[DATA ABL:ABIL'S] banking unit produced a return on equity of 6.4 per cent from 28.7 per cent. Headline earnings were also reduced by 77 per cent to 654 million rand from 2.9 billion rand in the previous comparative year.

The unit also generated an economic loss of 879 million rand from the previous year’s 1.4 billion rand.

“The Bank was negatively impacted by lower disbursements and advances growth, as well as deteriorating asset quality with commensurate higher credit impairment charges and credit life insurance claims,” the group explained.

ABIL’s retail unit also generated a headline loss of 284 million rand from a profit of 249 million rand in the previous comparative year.

This was as a result of a significant decline in sales caused by a difficult economic environment.

The retail unit also generated a negative return on sales of 7 per cent from 5.2 per cent in the previous year, negative return on equity of 10.1 per cent from a positive 9.2 per cent.

The unit generated an economic loss of 706 million rand from 141 million rand in the previous year.

ABIL has declared a final gross cash dividend of 5 cents per ordinary share, resulting in a total dividend for the year ended 30 September 2013 of 30 cents per ordinary share. This was from 195 cents in the previous comparative year.

“The South African economy and operating environment in which both the credit and retail businesses operate continue to prove challenging with little respite expected in the next financial year,” said the group.

“ABIL’s response to address the challenges is beginning to produce the desired results and should provide a solid underpin for a recovery.”

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