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African Bank has returned to profitability, reporting an R2 million profit after tax for the fiscal year ended 30 September, up from an R560 million loss in 2020.
When African Bank’s insurance operations are included, the company posted an after-tax profit of R534 million, compared to a loss of R27 million in September 2020.
African Bank stated that the fiscal year ended September 30th was significantly better than the previous year because the higher credit impairment charge levied a year ago was sufficient to account for the increased risk of default this year.
Furthermore, the bank achieved excellent debt collection results. African Bank’s credit impairment charge to cover bad debt and potential defaults fell to R1.3 billion from R3.4 billion in 2020.
The demand for African Bank’s MyWORLD transactional banking accounts was a highlight of the past year.741 000 accounts have now been established, up from 388 000 at the end of September 2020.
African Bank launched the MyWORLD account transactional product in May 2019, at the same time that two new challenger banks, TymeBank and Discovery Bank, entered the market. African Bank had previously not competed with other banks in the transactional banking space.
Its primary focus was on lending and saving. There were funds in 398 000 of these transactional accounts, up from 200 000 in 2020.
On September 30, transactional balances in these MyWORLD accounts totaled R914 million, a 133 percent increase from R392 million the previous year. In total, African Bank attracted R10.3 billion in retail customer deposits, including these MyWORLD transactional banking balances. Most of the money is, however, sitting in the longer-term retail savings deposits.
“Usage of the transactional accounts is also rising, with 17.3 million transactions having been processed,” wrote the bank in the results announcement. These transactions represented R24.5 billion in value in the current year.
Story by : Norvisi Mawunyegah