TIDM31HB
RNS Number : 8335Q
African Bank Ltd
24 June 2020
AFRICAN BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registered Bank)
(Registration No. 2014/176899/06)
Company code: ABKI
(the "Bank" or "African Bank")
RELEASE OF THE UNAUDITED INTERIM FINANCIAL RESULTS FOR AFRICAN
BANK LIMITED AND RELATED GROUP INFORMATION FOR THE SIX MONTHS ENDED
31 MARCH 2020
African Bank is pleased to announce that the Bank and its
holding company, African Bank Holdings Limited ("ABH" or "ABH
Group" or the "Group"), released their unaudited interim financial
statements for the six months ended 31 March 2020 ("results" and
"ABH consolidated results", respectively) today.
African Bank's results for the six-month period has been
impacted materially by the worsening macroeconomic conditions,
which have been intensified by the global Covid-19 pandemic. The
health and humanitarian crisis caused by the pandemic has
exacerbated the negative impact of a fragile economy on all South
Africans.
For the six months ended 31 March 2020, African Bank reported a
net loss after tax of R311 million, compared to a R69 million
profit reported at our 2019 half-year. A significant Covid-19
specific provision, amounting to R550 million, was processed in
this reporting period, increasing the credit impairment charge. The
Covid-19 specific provision is a best estimate calculated on the
information, such as collection data, available to the end of May
2020. Excluding the Covid-19 specific adjustment, the Bank recorded
a net profit after tax of R85 million on a pre-Covid-19 adjustment
basis.
The Bank's transactional banking proposition, MyWORLD, which was
launched on 21 May 2019, continues to grow steadily, with over 258
000 accounts opened in the past 10 months. We are also extremely
pleased with the increasing number of retail deposit customers who
continue to show trust in the Bank, as evidenced by the significant
increase in savings and investments deposits of 158% on a
year-on-year basis to R3.8 billion. These deposits have continued
to grow notwithstanding the Covid-19 lockdown. The Bank continues
to maintain robust capital levels and surplus liquidity.
Key aspects of the African Bank results, in comparison to the
unaudited interim results for the six months ended 31 March 2019,
include the following:
-- Loss after tax: R311 million (H1 2019: R69 million profit).
On a pre-Covid-19 adjustment basis, profit after tax amounted to
R85 million
-- Net customer advances balances: R18 995 million (H1 2019: R19 182 million);
-- Cash deposits, including surplus liquid assets: R5 393 million (2019: R5 990 million);
-- Retail customer deposits, including transactional banking
balances: R3 836 million (H1 2019: R1 489 million); and
-- Total capital adequacy ratio: 36.6% (H1 2019: 36.6%).
ABH Group information
African Bank is a 100% subsidiary of ABH. ABH is an unlisted,
registered bank controlling company under the Banks Act, Act 94 of
1990. The shares in ABH are privately held by the South African
Reserve Bank, the Government Employees Pension Fund, Absa Trading
and Investment Solutions (Proprietary) Limited, Capitec Bank
Limited, FirstRand Bank Limited, Investec Bank Limited, Nedbank
Limited and The Standard Bank of South Africa Limited.
ABH has material insurance operations which are housed in
African Insurance Group Limited ("AIG"), a wholly-owned subsidiary
of ABH, which in turn holds a cell captive investment in Guardrisk
Life Limited. The financial performance of the cell captive
investment, 100% owned by AIG, is not consolidated by ABH Group in
accordance with International Financial Reporting Standards
("IFRS").The financial performance of AIG is dealt with in the
audited consolidated annual financial statements of ABH Group by
means of a re-measurement of the investment in insurance contracts
and the dividend received from such cell captive.
In addition to the Bank's Covid-19 specific provision amounting
to R550 million, the insurance entity increased its Incurred But
Not Reported ("IBNR") provision to account for future expected
claims related to the Covid-19 pandemic, by R303 million. The total
pre-tax impact of these two Covid-19 specific adjustments amounts
to R853 million, negatively impacting the ABH Group after tax
profits by R614 million.
On a pre-Covid-19 adjustment basis, after removing the
pandemic-specific charges totalling R614 million, the net profit
after tax, year-on-year, decreased by 6% to R503 million.
On a post-Covid-19 adjustment basis the ABH Group reported a net
loss after tax of R111 million for the six months ended 31 March
2020 (H1 2019: R533 million profit). As a consequence, the Group's
return on equity ("RoE") was a negative 2.1% (H1 2019: positive
10.9%).
Key aspects of the ABH consolidated results, in comparison to
the unaudited consolidated interim results for the six months ended
31 March 2019, include the following:
-- Loss after tax for the year: R111 million (H1 2019: profit
R533 million). On a pre-Covid-19 adjustment basis, profit after tax
amounted to R503 million;
-- Insurance profit for the year: R146 million (H1 2019: R441 million); and
-- Total capital adequacy ratio: 40.1% (H1 2019: 37.3%).
Restatement of the prior year comparative numbers
In both the results and the ABH consolidated results, there has
been a restatement of certain numbers on the prior periods
comparative statement of total comprehensive income for the six
months ended 31 March 2019. Changes in expected credit losses on
purchased credit impaired financial assets (such as the advances
book acquired from Residual Debt Services Limited), where such
favourable changes exceed the loss allowance estimated at initial
recognition, were included in interest income on advances instead
of credit impairment charge. This classification adjustment had no
impact on the reported profit for period. Further detail is
included in the respective interim financial statements.
Shareholder-backed liquidity support arrangement
The Bank continues to work closely with the ABH Group
shareholders in respect of a planned shareholder-backed liquidity
support arrangement.
Results publication material
The following published results in respect of the six months
ended 31 March 2020 will be accessible on African Bank's website at
www.africanbank.co.za under the "Investors/Financial Reporting"
section as well as at the Bank's registered office, 59-16(th) Road,
Midrand:
1. African Bank Holdings Limited unaudited group consolidated
condensed interim financial statements for the six months ended 31
March 2020;
2. African Bank Holdings Limited investor presentation and
interim results booklet;
3. African Bank Limited unaudited condensed interim financial
statements for the six months ended 31 March 2020; and
4. African Bank Limited and African Bank Holdings Limited Basel
Pillar III Disclosure documents as at 31 March 2020.
Webcast details, presentation material and playback facility
Interested parties are invited to register for a live webcast
during which Basani Maluleke, ABH Group CEO and Gustav
Raubenheimer, ABH Group CFO, will take participants through the ABH
consolidated results. Details of the webcast are:
Date Wednesday, 24 June 2020
Time 10h00 SAST/CAT
-------------------------------------------------
Web pre-registration Interested parties are requested to pre-register
for this webcast at live webcast and follow
the instructions provided.
-------------------------------------------------
A recording of the webcast will be available on the Bank's
website at www.africanbank.co.za under "Investors/Financial
Reporting" .
24 June 2020
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END
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