African Bank says it is signing up 25,000 users to its MyWORLD retail banking account each month.
The group on Tuesday (26 November), reported an operating profit of R1.6 billion for the year ended September 2019, up 11% from the prior year.
Net profit after tax for the year up 13% to R 1.15 billion. This, it said, was largely due to improvements in the banks’ loan book and the collection of outstanding balances. An improvement in the insurance results and a more efficient balance sheet also had a positive effect, it said.
It said that ROE improved to 11.1% from 10.6%, while retail deposits increased by 115% to R2.4 billion from before.
“The group delivered a pleasing set of results, reporting a third successive year of increasing profits,” said African Bank chief executive officer, Basani Maluleke.
“We have made good progress in achieving our strategic objectives. One of the Bank’s most important strategic objective is the diversification of its product offering. We proudly launched our transactional product, MyWORLD, on our new Omni-channel in May this year.
“MyWORLD will significantly accelerate our efforts to diversify our revenue streams and broaden our customer base, while aiding our efforts to better understand our customers, attract additional retail deposits and grow our digital capabilities.”
Maluleke said that the bank has continued to invest in and develop its direct sales and digital channels.
“At the commencement of the new African Bank in 2016, 100% of our credit sales were originated and fulfilled through our branch network. Our branch network now accounts for 80% of our credit sales.
“The new sales channels are creating greater convenience for our customers as they allow our customers to bank 24/7 and through the channel of their choice. These new channels also demonstrate traction with the implementation of our digital strategy.”
Operating expenditure increased 13% to R2.966 billion. “The expenditure supported increased credit disbursements, additional recruitment for transactional banking and information technology, and additional marketing spend, particularly in respect of our new product offering and our retail deposits, as we continue our strategic transformation journey,” African Bank said.
New loan and credit card business, written for the year under review, was R10.8 billion – representing an increase of 12% year-on-year, with the direct sales channel contributing R1.7 billion, and the new web channel contributing R451 million. Together, direct sales and the web channel contribute 20% of sales, compared to 6% in 2018.
The lender said that the number of retail savings and investments depositors increased to 26,000 from 15,000, while the average deposit has increased to R88,000 from R72,000 over the same period.
Launch of MyWORLD significant to accelerate strategic objectives
African Bank’s zero monthly fee transactional banking product, MyWORLD was launched to customers in May 2019. It has since attracted 100,000 new accounts – and 50% of account holders are new to bank customers.
The group told BusinessTech that it is targeting growth of 200% into 2020, with 25,000 new accounts being signed each month. It said that it will also ramp up new product offerings.
Robust capital and liquidity
African Bank said it continues to operate with robust levels of capital and liquidity.
“Liquidity levels have been impacted positively through the increase in retail deposits, which represent 12% of the funding base. We are gradually reintegrating into the debt capital markets. We also continue to work with our shareholders to execute a shareholder liquidity support to accelerate our reintegration into the debt capital markets, to fund the growth of the bank, it said.
Commenting on the bank’s outlook Maluleke said: “The successes during 2019 were achieved in a challenging macroeconomic environment. The South African consumer remains under financial pressure and we remain prudent in our credit underwriting.
“In the year ahead, in addition to our credit sales, we will invest in the sales of MyWORLD, our funeral product, as well as our retail deposit products. We also plan to launch new products to further diversify our offering and meet customer needs.
“We will also focus on the further development of our big data capabilities, which will enable us to optimise costs, improve our credit underwriting and collections and move us closer to becoming a leader in customer satisfaction.”