African Bank adds over 500,000 new accounts – as it eyes a big move to business banking

Banking group, African Bank has published its full-year results for the 12 months ending September 2022, reporting a jump in profitability as it continues to expand its transactional base and eyes a big move into the business banking space.

The African Bank Group reported a net profit after tax of R736 million for the year ended 30 September 2022 (FY21: R534 million profit). The Group’s return on equity was a resultant positive 6.4% (FY21: positive 4.9%).

According to African Bank, a number of key factors have contributed to the group’s strong position, including loan disbursements exceeding pre-Covid levels, stable credit impairments, and the effective containment of operating costs.

However, one of the most encouraging aspects of the business is the growth in its transactional MyWORLD and credit card accounts and transactions.

The group recorded a total of 1,253,000 MyWORLD accounts have been opened to date, up 69% from 741,000 accounts in 2021. Of these accounts, 712,000 are funded accounts, a growth of 79%, year-on-year.

“As a result, there has also been a marked increase in MyWORLD transactions, with 35 million recorded in the current reporting period for a transactional value of R45 billion, up from R25 billion,” it said.

In terms of unique customers, the bank recorded 1.54 million individuals holding 2.16 million products. Of this, 37% – or approximately 570,000 are MyWORLD account holders.

“Our MyWORLD transactional banking offering is an important element in our new strategy. MyWORLD allows us to drive cross-selling initiatives and value-added services, which in turn allows us to leverage complementary products,” the bank said.

Further to its growth strategy is a big plan in the business banking space.

On 6 October 2022, African Bank received the necessary approvals to complete its acquisition of Grindrod Bank for R1.5 billion. A few weeks later, on 31 October 2022, Ubank’s assets and liabilities acquisition became unconditional.

The group said that the acquisition of Grindrod Bank would hasten the development of its capacity to service businesses and SMMEs.

“We have targeted the underserviced space in the middle and lower end of the business pyramid and will include smaller enterprises in a digital-first and data-led approach that goes beyond unsecured lending,” the group said.

“The acquisition of Grindrod Bank, as well as the assets and liabilities of Ubank, will further strengthen the Group’s balance sheet and liquidity position next year.”

The bank also gained the necessary approvals from its main shareholders – the South African Reserve Bank the Government Employees Pension Fund – to launch an initial public offering for Grindrod Bank.

“The timing of the IPO will be dependent on prevailing market conditions. The SARB noted that the period leading up to the IPO will provide the group with the opportunity to continue with our successful turnaround programme and execute our growth strategy,” the group said.

Looking ahead, the bank said it is aiming for 100,000 SMME customers by FY2025 while targeting 3.5 million retail customers.

BusinessTech