African Bank reports 36% jump in customers
African Bank’s full year profit stayed almost flat as it faced a difficult operating environment that has rendered almost a third of its personal banking loan book likely to result in credit losses. The group’s non-interest income grew by 14 per cent to R1.54 billion, supported by increased use of its MyWORLD transactional accounts and credit cards, as well as the group’s expanding insurance offerings. Anbann Chetti, CFO, African Bank joins CNBC Africa for more.
Tue, 26 Nov 2024 15:48:22 GMT
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AI Generated Summary
- The bank's non-interest income and insurance revenue surged by 14 percent, showcasing resilience in a tough economic climate.
- African Bank witnessed a 36 percent growth in its customer base, exemplifying the bank's appeal and market traction.
- Strategic diversification, purpose-led lending initiatives, and a customer-centric approach position African Bank for sustained growth.
African Bank's full-year profit saw a marginal increase despite facing a challenging operating environment that could potentially result in credit losses for almost a third of its personal banking loan book. The group's non-interest income grew by 14 percent to R1.54 billion, fueled by the increased usage of MyWORLD transactional accounts, credit cards, and the expansion of insurance offerings. Anban Chetti, the CFO of African Bank, joined CNBC Africa to delve into the financial figures and shed light on the key themes surrounding the bank's performance.
Chetti highlighted the theme of a 'steady financial performance' amidst the tough macroeconomic conditions, emphasizing the bank's efforts to diversify its balance sheet. Despite a decline in net interest income, the non-interest income and insurance revenue surged by 14 percent, underpinning the bank's resilience in a challenging economic climate. Notably, the customer base witnessed a significant 36 percent growth, reaching R5.4 billion.
One of the key observations in customer behavior pointed out by Chetti was the persistent demand for credit, with over 100,000 credit applications received monthly. However, the bank carefully assesses and approves only around 30 percent of these applications, ensuring a robust credit-granting model. Moreover, there has been a proactive focus on client support during financial adversities, reflected in the efficient collection strategies and a notable 20 percent reduction in the credit impairment charge year-on-year.
A significant portion of African Bank's balance sheet comprises its business and commercial segment, amounting to a substantial 38 percent of net advances. The bank has strategically diversified its portfolio over the years, with a considerable shift from 8 percent to the current 38 percent allocation towards business and commercial advances. Moreover, the bank's foray into purpose-led lending, particularly in the home loans sector, has shown promising results. By piloting the model with staff, African Bank aims to fine-tune the client experience, ensuring a seamless and efficient home loan application process.
Looking ahead, African Bank's approach to acquisitions underscores a focus on acquiring capabilities rather than expanding for the sake of acquiring. With a strong capital ratio and liquidity, the bank remains agile in pursuing strategic partnerships that enhance its offerings. The bank's commitment to underserved segments, such as students and career starters, reflects its vision of being a holistic financial partner rather than a mere product provider.
As the discussion touched upon the IPO journey, Chetti outlined the bank's phased approach, including the recent staff share scheme and future management schemes in alignment with strategic partners. The bank envisions a traditional IPO post the FY27 results, showcasing a strategic and well-structured path towards potential public offering.
In conclusion, African Bank's resilience in navigating a challenging economic landscape, coupled with strategic diversification and a customer-centric approach, positions the bank for sustained growth and value creation in the financial services sector.
Chetti highlighted the theme of a 'steady financial performance' amidst the tough macroeconomic conditions, emphasizing the bank's efforts to diversify its balance sheet. Despite a decline in net interest income, the non-interest income and insurance revenue surged by 14 percent, underpinning the bank's resilience in a challenging economic climate. Notably, the customer base witnessed a significant 36 percent growth, reaching R5.4 billion.
One of the key observations in customer behavior pointed out by Chetti was the persistent demand for credit, with over 100,000 credit applications received monthly. However, the bank carefully assesses and approves only around 30 percent of these applications, ensuring a robust credit-granting model. Moreover, there has been a proactive focus on client support during financial adversities, reflected in the efficient collection strategies and a notable 20 percent reduction in the credit impairment charge year-on-year.
A significant portion of African Bank's balance sheet comprises its business and commercial segment, amounting to a substantial 38 percent of net advances. The bank has strategically diversified its portfolio over the years, with a considerable shift from 8 percent to the current 38 percent allocation towards business and commercial advances. Moreover, the bank's foray into purpose-led lending, particularly in the home loans sector, has shown promising results. By piloting the model with staff, African Bank aims to fine-tune the client experience, ensuring a seamless and efficient home loan application process.
Looking ahead, African Bank's approach to acquisitions underscores a focus on acquiring capabilities rather than expanding for the sake of acquiring. With a strong capital ratio and liquidity, the bank remains agile in pursuing strategic partnerships that enhance its offerings. The bank's commitment to underserved segments, such as students and career starters, reflects its vision of being a holistic financial partner rather than a mere product provider.
As the discussion touched upon the IPO journey, Chetti outlined the bank's phased approach, including the recent staff share scheme and future management schemes in alignment with strategic partners. The bank envisions a traditional IPO post the FY27 results, showcasing a strategic and well-structured path towards potential public offering.
In conclusion, African Bank's resilience in navigating a challenging economic landscape, coupled with strategic diversification and a customer-centric approach, positions the bank for sustained growth and value creation in the financial services sector.
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