African Bank Group Reports Marginal Profit Growth Amid Strategic Shifts
African Bank Group announced marginal growth in net profit after tax for the fiscal year ending September 30, 2024. Profits rose from R521 million in FY2023 to R523 million in FY2024, reflecting a “satisfactory” outcome given the group’s deliberate focus on curbing growth in unsecured personal loans.
Despite a 4% drop in interest income to R7 billion (2023: R7.3 billion), the bank noted a slower-than-expected conversion of business and commercially approved loans. A shift towards lower-yielding products, including credit cards and overdrafts, coupled with the integration of secured lending, contributed to a decline in net interest margin to 9.7% (2023: 10.9%).
Improved Credit Loss Ratio
The bank achieved a 20% improvement in credit impairment charges, reducing them to R2.6 billion (2023: R3.3 billion). This resulted in a decline in the credit loss ratio to 6.3% (2023: 8%). The improvement is attributed to diversification into secured lending, stricter credit granting criteria, and enhanced collection and rehabilitation processes.
Operating expenses were contained, dropping by 1%, although the cost-to-income ratio rose slightly to 58.7% (2023: 57.2%).
Advances and Funding Growth
Net advances increased by 8%, with the business and commercial segment accounting for 38% of total customer advances. Total funding rose to R35.5 billion (2023: R34.6 billion), with business and retail deposits comprising 92% of funding (2023: 87%).
The customer base expanded significantly by 36% to 5.4 million, with personal banking customers growing 17%. The Alliance Banking partnerships, which include Shoprite Checkers, Lesaka, and MTN’s Momo, contributed an additional 3.2 million customers.
Business and Commercial Segment Expansion
The integration of Grindrod Bank into African Bank’s Business & Commercial division was finalized during the year. Additionally, the acquisition of Sasfin’s commercial property finance advances book was completed in August 2024, with the acquisition of its capital equipment finance book finalized on November 1, 2024. These developments are expected to accelerate growth in the business and commercial segment.
Strategic Outlook
Looking ahead, African Bank plans to expand its home loan offering beyond staff members and onboard more partners in its Alliance Banking initiatives, including fintech and non-banking firms. The group also intends to diversify its insurance offerings.
Kennedy Bungane, the group CEO, confirmed the bank’s progress in its pre-initial public offering (IPO) preparations. Having secured the Government Employees Pension Fund (GEPF) as its anchor shareholder, African Bank aims to list by 2027.
“In partnership with our anchor shareholder, we are addressing management alignment and Black Economic Empowerment (BEE) ownership. Our goal is to return ownership of the bank to the black entrepreneurs who founded it in 1964,” Bungane said.
This growth marks a key phase in African Bank’s journey toward expansion and a return to its foundational ethos.
