Financial reporting

MILESTONES FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 2025

• Diversification strategy starting to show green shoots while operating in a volatile environment.
• The diversification of the African Bank Group balance sheet continues to progress well and consists of:

• Net advances of R39.1 billion (H1 24: R32.7 billion), representing robust growth of 20% in this reporting period, with Business & Commercial growing by 49% while Personal Banking grew by a modest 3%,
• An increasing funding base growing by 8% to R36.3 billion (H1 24: R33.5 billion) mainly funded by customer deposits representing 91% (H1 24: 91%) of total funding while maintaining the confidence of the debt capital markets,
• Adequate liquidity with cash reserves, excluding statutory asset requirements, totalling R3.7 billion (H1 24: R7.9 billion) having moderated following the deployment of cash reserves into Business & Commercial advances, and
• A capital adequacy position in excess of our regulatory and internal minimums, with a total capital adequacy ratio of 28.0% (H1 24: 32.5%) as asset growth continues. The Prudential Authority (“PA”) raised concern regarding a capitalisation transaction.The Group has adopted a conservative approach and has adjusted for the financial impact.The capital ratio shown above has been adjusted accordingly. Including this transaction, the capital ratio would be 29.6%. We are currently engaging with the PA.

• The Group reported a satisfactory increase in net profit after tax for the six months ended 31 March 2025 of R202 million (H1 24: R176 million), up 15%.
• Reviewing the various elements of the Group’s operational performance:

• Interest income increased by 6% to R3.7 billion (H1 24: R3.5 billion), positively impacted by the growth in the Business & Commercial loans book,
• Cost of funding continued to be well managed at 7.9% (H1 24: 7.8%) with the addition of the more expensive Tier 2 funding,
• Non-interest income (net of related card and transaction fee costs) grew by 39% to R909 million (H1 24: R652 million) as usage of the transactional MyWORLD and credit card accounts by customers increased, further bolstered by various non-transactional revenues which includes fees, commissions and unclaimed balances,
• Net insurance income increased by 8% to R308 million (H1 24: R286 million), with the improvement of claims management,
• Operating expenses increased by 16%, with a cost to income ratio of 62.0% (H1 24: 56.1%) as the group continues to invest in transformation journey to build a data and digitally enabled fully-fledged personal and business & commercial bank, and
• Credit impairment charges continued to improve by 10% to R1 222 million (H1 24: R1 355 million) resulting in a corresponding reduction in the credit loss ratio to 5.3% (H1 24: 6.6%), following the intentional book diversification to secured Business & Commercial lending, and improved credit risk management including regular book sales aligned to industry practice in Personal Banking.