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11 Nov 2013 12:17
African Bank chief executive Leon Kirkinis has had a rough couple of months. (Supplied)
African Bank posted a loss for the fiscal year through September after writing down its furniture retail unit Ellerines.
The loss compares with restated profit of R3.1-billion a year earlier after a R4.6-billion impairment charge at its Ellerines business, the African Bank said in a statement.
Earnings per share, excluding one-time items, fell 88% to 45.1 cents and the ordinary divided per share dropped 85% to 30 cents, the company said.
Lower consumer confidence, pressure on disposable incomes, higher levels of indebtedness and labour market unrest led to lower demand for credit products and merchandise, lower collections and increased arrears, African Bank said.
"The events of the past year have proven that we did not act boldly enough" when there were signs of increased risk, it said, adding that the bank took on low-quality loans last year.
African Bank, which targets low-income earners with unsecured credit, increased bad-loan provisions as consumers struggle to repay debt.
It bought furniture company Ellerines in 2008 for R9.2-billion and now wants to sell the unprofitable unit, which has more than 1 000 stores.
To buoy capital levels the bank is issuing a R5.5-billion rights offer, underwritten by Goldman Sachs Group. – Bloomberg
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