African Bank reports loss of R27 million in end of September

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African Bank has reported a net loss of R27 million for the year ended 30 September 2020.

The announcement comes on the back of the resignation of the bank’s Chief Executive Officer (CEO) Basani Maluleke, who announced that she was stepping down to pursue other career opportunities.

Maluleke contributed towards increasing the bank’s retail investments and resuscitating its brand following its failure in 2014.

Despite the reported net loss, the bank says its retail savings and investment deposits increased by 149% to R6 billion on an annualized basis.

In a statement, the bank said that Maluleke will serve out her notice period until 30 April to ensure a smooth hand-over process.

African Bank’s Chief Financial Officer (CFO) Gustav Raubenheimer has been appointed as the bank’s interim CEO.

“Our Chief Financial Officer Gustav Raubenheimer would step into the interim CEO role pending the approval of the prudential authority. We remain committed to execute on the strategy which we have developed which is to enhance the lives and our confidence of our executive team that has the depths to continue to take the bank forward,” says Thabo Dloti, African Bank Board Chairperson.

Raubenheimer says the R27 million net loss is as a result of the economic effects of COVID-19 as well as credit impairments and reduced insurance income. The Group’s return on equity also came in marginally lower at minus 0.3%.

“The Group has made a small loss of R27 million and that’s been largely driven by the tough economic scenario as well as COVID. We are, however, encouraged by the second half of the year during which we made a profit of R84 million and that is because risk has reduced largely because of changes we’ve made underwriting, changes we made to collections and also good cost control,” says Raubenheimer .

African Bank says it will continue to apply conservative measures when it comes to granting credit by only focusing on low risk customers which make up 87% of the loans advanced this year.