African Bank underestimates soured loans, slides to loss

African Bank Investments (Abil), South Africa’s largest provider of credit not backed by assets, slid to a fiscal first-half loss after bad debts rose more than forecast and it increased provisions for loans that may sour.

Abil fell to a net loss of R4.38-billion in the six months through March from restated net income of R602-million a year earlier, the Johannesburg-based lender said in a statement on Monday. 

It also posted a loss per share excluding one-time items of R2.41 compared with restated earnings of 62.3 cents a year earlier.

South African consumers are under pressure as inflation and unemployment rises because of sluggish economic growth. This is making it harder for African Bank customers to repay unsecured loans and obtain new credit, while crimping sales at Abil’s furniture retailer, Ellerine. 

Abil withheld its ordinary interim dividend and will give more guidance on its payout cover when releasing full-year earnings, the company said.


New business volumes, in line with levels seen in 2011, won’t grow “significantly” over the next two years after the lender reduced the maximum term for a loan to 60 months from 84 months, Abil said. “The group is only at the beginning of a turnaround that will take time to return to acceptable shareholder returns.”

Abil is South Africa’s worst-performing bank stock this year, having dropped 30%. It rose 0.2% to R8.45 on May 16. – Bloomberg

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertising

Ramaphosa asks all South Africans to help to avoid 50...

Calling this ‘the gravest crisis in the history of our democracy’, the president said level three lockdown remains, but enforcement will be strengthened

Reinstated Ingonyama Trust managers hit with retrenchment notices

The effect of Covid-19 and the land reform department’s freeze of R23-million because the ITB didn’t comply with budget submissions are cited as some of the reasons for the staff cuts
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday