Financial reporting

MILESTONES FOR THE ANNUAL FINANCIAL YEAR ENDED 30 SEPTEMBER 2023

• Successful acquisition and integration of Grindrod Bank and Ubank’s assets, liabilities and operations.
• The African Bank Group is now a diversified entity, with a larger and stronger balance sheet consisting of:

• Net advances book growing by 41% to R32.0 billion (FY22: R22.6 billion), with secured business banking loans making up more than a third of our loans to customers and providing the planned diversification,
• A funding base that has further diversified with business and retail deposits, now making up 87% (FY22: 76%) of total funding of R34.6 billion (FY22: R16.6 billion),
• Sufficient liquidity with cash reserves totalling R9.9 billion (FY22: R2.8 billion), and
• A strong capital position that funded the two acquisitions, whilst maintaining an optimal capital adequacy post the acquisitions of 30.0% (FY22: 43.4%), exceeding regulatory and internal minimums.

• This enlarged balance sheet has resulted in the following positive operational performances:

• Interest income earned on the advances book growing by 30% to R7.3 billion (FY22: R5.7 billion), with a net interest margin of 11.0% (FY22: 14.0%),
• Diversification benefits have resulted in the cost of funding reducing from 7.9% in FY22 to 7.3%, notwithstanding the 200 bpt increase in the repo rate over the same period,
• Non-interest income has grown by 144% to R1.6 billion (FY22: R0.7 billion) as more customers transact on their MyWORLD and Credit Card account, and acquire value added services from the Group,
• Insurance profits from cell captive arrangements have increased by 92% to R670 million (FY22: R349 million) mainly on the back of claims normalise,
• Business Banking contributing R682 million in total net revenue for the 11 months from the effective date of acquisition (1st November 2022),
• Total net revenue before impairments grew by 40% to R8.1 billion (FY22: R5.8 billion), and
• Operating expenditure increases with a cost to income ratio of 58.7% (FY22: 56.3%) as the Group is in an investment phase whilst integrating the new businesses.

• Negative economic environment affected Consumer Banking’s customers resulting in rising credit impairment charge and a Group credit loss ratio of 8.0% (FY 22: 4.9%)
• Resulted in the Group reporting a net profit after tax of R505 million for the year to 30 September 2023 (FY 22: R736 million profit)

CUSTOMERS

• The building of a more fully-fledged bank with both consumer and business banking divisions
• Servicing 4.0 million active customers on all group platforms, up 158% (FY 22: 1.5 million)

MyWORLD TRANSACTIONAL BANKING

• MyWORLD transactional accounts steadily increasing with 0.9 million funded accounts, up 72% y-o-y.
• Transactional volumes rising to 26.1 million (H1 22: 14.5 million), representing R29.7 billion (H1 22: R19.6 billion) in value over the six-month period.