African Bank reported maiden interim results on Tuesday (post recapitalisation) for the six months ending September that demonstrate the herculean effort undertaken to revive the bank from the country’s corporate scrapheap has been justified.
“There were significant improvements across all aspects of the business,” says African Bank CEO, Brian Riley. The bank registered a maiden operating profit of R335 million for the period, with contributions from both the bank and insurance entity. The substantial impairment of goodwill of R1 947 million meant the bank registered an attributable loss to owners of some R1 678 million.
The bank owes its continued existence to the R10 billion equity injection provided by the South African Reserve Bank (SARB)(R5 billion), the consortium of banks (R2.5 billion) and the Government Employees Pension Fund (R2.5 billion), as well as the efforts of Tom Winterboer and the team that took over the reins during curatorship, and the current management team led by Riley, and chairman Louis von Zeuner.
Due to the SARB’s participation, Riley says the bank is one of the most highly regulated entities in the country at the moment, “so compliance is high on our agenda.” There have been no offers for the bank and there are no plans to list it, but Riley did concede that he does not expect the SARB to be long-term shareholders.
The new African Bank has an “unusual” balance sheet – it is extremely well-capitalised (has more money than it needs to sustain the current level of lending activity) to the point that Riley describes it as “inefficient.”
You can see in the graph how much cash the bank holds in relation to its outstanding advances.
