VENTURES AFRICA – African Bank Investments Ltd (ABIL) has reported an 18 percent rise in its headline earning per share for the year ended September 2012, on the back of strong uptake of the group’s credit and retail products.
Headline earnings per share rose to 342.5 cents for the year, while ABIL met its 20 per cent targeted return on equity and tangible return on equity of 26.3 percent. Economic profit grew by 53 percent to 755 million rand ($85 million).
The group also attributed the strong results to a high repeat business demand for the brand, while saying that the expansion of the bank had also reaped rewards, according to Business Report. The bank focuses on customers earning 15,000 rand ($1,691) per month and below.
“We have managed to steer our operations successfully through the economic volatility during the year and have built a robust‚ well capitalised and flexible business to position us as the market leader in a larger‚ more competitive unsecured credit market‚” said CEO Leon Kirkinis.
The main driving force behind the increase in profits was the banking unit of the group, which represents 91 per cent of earnings. It reported a ROE of 22.9 percent. Headline earnings increased by 18 percent to 2.8 billion rand ($315 million).
The news was not all positive, however. Staffing costs increased, along with collection costs. Bad debt charges were slightly elevated.
The group said they believed the business was extremely sustainable and that they had switched their focus for 2013 to returns rather than growth. With strong capital ratios and liquidity profile‚ and expected earnings and further capital and debt raisings enabling the group to remain solvent, it is expected that advances will grow by around 15 percent.
“We were pleased to note that the combination of increased regulatory scrutiny and heightened awareness by key players in the market has begun to curb excess supply of credit and that a slowdown of credit extension is evident in the most recent bureau information‚” Kirkinis noted.
“We remain cognisant of our customers’ requirements as well as financial distresses in this deteriorating macroeconomic environment. We will continue to adapt our affordability and debt rehabilitation measures and processes accordingly as we strive to create responsible access to credit for South Africans in our target market.”