The company, which consists of unsecured credit provider, African Bank and Ellerine Holdings – its retail and financial services operations, also expects a headline loss per share of between 239 and 254 cents relative to comparable restated headline earnings of 62.3 cents per share in 2013.
(READ MORE: ABIL appoints CEO for Ellerine Holdings)
“The operating environment continues to be challenging, with consumers remaining under financial pressure. The loans business written up to the end of June 2013 continues to produce an elevated level of non-performing loans (NPLs) each month,” said [DATA ABL:African Bank Investments Limited] (ABIL).
“The business written post June 2013 shows the expected level of reduction in credit risk due to the stricter underwriting interventions implemented in July 2013. Consumer spending on furniture and appliances remains very subdued.”
ABIL expects a basic loss of between 4.3 and 4.5 billion rand in relation to the 602 million rand restated basic earnings for the comparative period a basic loss per share of between 331 and 347 cents per share compared to 62.1 cents per share.
The banking unit of the company alone is expected to show a headline loss of between 1.9 and two billion rand.
“Although the expected slowdown in NPL formation is evident, this decline is taking longer than originally anticipated. It is expected that the emergence of NPLs from the last quarter of 2012 will gradually fall further in the months ahead,” ABIL said.
(READ MORE: ABIL suffers severe losses in 2013 FY)
“In light of the elevated level of NPLs emerging from the pre July 2013 business, a decision has been taken to significantly increase the general provision on PLs that are anticipated to become NPLs in the next six months and beyond. This action is being taken to prevent future results from continuing to be adversely affected by the higher level of emergence of NPLs from the pre July 2013 business.”
It added that, excluding the impact of the increased impairment charge of 3.1 billion rand, normalised headline earnings for the banking unit would have been between 232 and 332 million rand.
Headline loss for ABIL’s retail unit is expected to be between 1.2 and 1.3 billion rand for the six months to March 2014.
BY: NICOLE NAIDOO