African Bank CEO, Kennedy Bungane. Picture: Supplied
African Bank yesterday reported a R523 million net profit for its 2024 financial year in the face of a challenging economic environment, underlining it’s effectiveness in navigating adversity.
With an impressive capital adequacy ratio of 31.4% and robust liquidity reserves of R7.1 billion, African Bank is positioning itself as a formidable player in South Africa’s financial landscape.
Group CEO Kennedy Bungane said: “This year’s performance affirms African Bank’s ability to deliver value even in a constrained environment. Our focus on diversifying revenue streams and providing innovative, customer-centric solutions positions us as a key player in South Africa’s financial sector.”
The bank’s growth trajectory is evident in its diversification efforts, with net advances climbing 8% to R34.4bn. Notably, secured business and commercial lending now accounts for 38% of these advances, signalling a shift in lending practices aimed at lowering risk.
Meanwhile, personal banking services have attracted a surge in customers, resulting in an impressive 36% year-on-year increase in the bank’s overall customer base, which now stands at 5.4 million from 4 million last year.
Interest income reached R7bn, even as the bank intentionally pivoted towards lower-risk, secured lending. The strength of its non-interest income was also notable, growing 14% to R1.54bn, driven by a rise in the usage of MyWORLD transactional accounts and credit card usage, coupled with a bigger range of insurance products.
Credit impairment charges improved, with a 20% decrease from the previous year, leading to a lower credit loss ratio of 6.3%—a marked drop from 8% in the 2023 financial year.
“These numbers represent more than just financial success ‒ they reflect our ongoing commitment to building a diverse, scalable, and sustainable business that can serve South Africans better,” said Bungane.
African Bank’s commitment to innovation was reflected in its latest offerings, including renewable energy financing, mobile partnership handset financing, and a soon-to-launch pilot home loans programme for staff that is set to expand to the broader market in 2025.
The bank has also strengthened its foothold in the Business & Commercial banking sector through the divisionalisation of Grindrod Bank and the acquisition of Sasfin’s Commercial Property Finance and Capital Equipment Finance sectors. These provide vital support to small, medium, and micro enterprises (SMMEs) and aspiring entrepreneurs.
As African Bank continues to align its growth ambitions with enhanced governance and risk management frameworks, an initial public offering may be on the cards in 2027/28.
The bank remains devoted to financial inclusion and economic development, with initiatives tailored for underserved communities, a growing array of products, and an adaptable approach to a continually evolving economic backdrop.
In addition to its strong performance metrics, African Bank illustrates a commitment to reshaping its funding strategy, with 86% of its total funding derived from retail depositors as of September 30 2024. This shift reinforces the bank’s goal to diversify funding sources while establishing a strong foundation for growth.
As macroeconomic conditions improve, bolstered by predictions of further interest rate cuts, stakeholders in African Bank can anticipate a lucrative period ahead, said Bungane.
The peaceful elections and the establishment of a newly unified government are predicted to stimulate investor confidence, further enhancing business conditions in South Africa, he said.
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