Buoyed by positive economic conditions and demand for credit, the country’s biggest microlender, African Bank Investments Limited (Abil), boosted headline earnings by 30% from R327-million to R424-million for the six months ended March.
This translated into headline earnings per share of 90,2 cents, compared with 69,2 cents for the previous comparable half-year.
The group declared an interim dividend per share of 52 cents, which was a 49% increase on the previous figure of 35 cents a share.
The group’s return on equity increased from 27,4% to 34,7%, while it increased its return on assets from 10,5% to 11,6%.
“Positive economic conditions, continuously improving disposable income in the market sectors that Abil targets and buoyant demand for credit created favourable conditions for the group to deliver a strong operating performance over the last six months,” Abil stated.
“The group’s thrust during the last year has been one of delivering on several of its long-term strategies for growth — improving market penetration, cost-efficiency and optimal capital structures in order to lower the overall cost of credit to our clients.
“As previously stated, the group’s appetite for unsecured lending growth is driven by our view of prevailing market conditions. The sustained low inflation environment and improving economic conditions of our target client base — due in part to the success of transformation efforts in the economy — have created a positive climate for growth.
“This has allowed the group to flex its credit criteria and increase the access to credit for our clients. It is anticipated that these positive economic conditions will continue over the next 12 months,” the group added.
However, on a cautious note, it said the implementation of the National Credit Bill will result in some uncertainty until the effects of the regulations have been fully priced.
The group’s total yield on advances improved from 59,5% to 62,2% over the six-month period, which was attributable to continued changes in the mix of the portfolio towards retail debit order loans as well as significant write-offs and collections of low-yielding, non-performing loans and pay-down books.
Non-performing loans declined by R440-million — a 20% reduction — due to a R694-million write-off on old non-performing loans and continued success in collections activities.
Sales turnover for the half-year increased by 15% to R2,5-billion, leading to a 14% increase in the lending books, while expenditure fell by 7% from R508-million to R471-million.
Looking ahead, Abil said it is on track to achieve at least its objectives of a 30% return on equity and a 10% return on assets for the full year to September 30.
“In order to achieve this, the group anticipates certain trends in its key business drivers. Growth in the lending books from increased sales are expected to be similar to that achieved in the first half of the financial year, overall yields will moderately increase but are expected to peak by September 2005, bad debts remain steady, and operating costs will further benefit from efficiency strategies being implemented,” the group said. — I-Net Bridge