Financial reporting

MILESTONES FOR THE YEAR ENDED 30 SEPTEMBER 2024

• Steady financial performance in a tough economic environment with a growing customer franchise and diversifying balance sheet set for further growth
• The diversification of the African Bank Group balance sheet continues to progress well following the integration of acquisitions, and consists of:

• Net advances of R34.4 billion (FY23: R31.8 billion), with solid growth of 8% in this financial year, with secured Business & Commercial making up 38% of our advances to customers and delivering the benefits contemplated from the acquisitions,
• A stable funding base that has further diversified with business and retail deposits making up 92% (FY23: 87%) of total funding of R35.5 billion (FY23: R34.6 billion),
• Significant liquidity with cash reserves, excluding statutory asset requirements, totalling R7.1 billion (FY23: R9.9 billion),
• Strong capital adequacy position, with a total capital adequacy ratio of 31.4% (FY 23: 29.5%) bolstered by successful Tier 2 bond issuances, well exceeding our regulatory and internal minimums.

• Although the tough operating environment in South Africa persists, there are early signs of green shoots and improvements. The Group reported a satisfactory net profit after tax for the twelve months ended 30 September 2024 of R523 million (FY 23: R521 million).
• Reviewing the various elements of the Group’s operational performance:

• Interest income declined by 4% to R7.0 billion (FY23: R7.3 billion), mainly because of the deliberate strategy of subdued growth in unsecured personal loans and the slower than expected conversion of the Business & Commercial approved loans. Further, the shift to the lower yielding credit card and overdraft products, together with the integration of the lower yielding secured lending in Business & Commercial resulted in the net interest margin declining to 9.7% (FY23: 10.9%),
• Cost of funding continued to be well managed at 7.9% (FY23: 7.4%) notwithstanding that the average repo rate rising by 77 basis points over the financial year, and the addition of the more expensive Tier 2 funding,
• Non-interest income (net of related card and transaction fee costs) grew by 14% to R1 537 million (FY23: R1 345 million) as usage of the transactional MyWORLD and credit card accounts by customers increased, and value-added services offered by the Group through the expanding Alliance partnership customer base were consumed,
• Net insurance income increased by 14% to R821 million (FY23: R718 million), and include the IFRS17 related updates
• Operating expenses were well contained and reduced by 1% compared to the prior year, with a cost to income ratio of 58.7% (FY23: 57.2%) as the group continues with its significant investment and integration phase, and
• Credit impairment charges improved by 20% to R2 609 million (FY23: R3 262 million) resulting in a corresponding reduction in the credit loss ratio to 6.3% (FY23: 8.0%) due to the book diversification to secured lending, management’s actions of refining the credit granting criteria, leading to conservative disbursements, and improving the collections and rehabilitation processes.