Basani Maluleke. Picture: SUPPLIED
Basani Maluleke. Picture: SUPPLIED

African Bank is clawing its way back into SA’s financial services arena and looks set to reclaim its historic position as Capitec’s major competitor when it launches its transactional banking product in 2018.

CEO Brian Riley would not divulge details, but in conversation with Business Day on Friday hinted that African Bank’s transactional offering, expected in June, would be positioned between digitally astute FNB and new entrant TymeDigital.

The launch of African Bank’s transactional product will coincide with the entrance of Discovery Bank, boding well for competition in retail banking.

Capitec, which also grew its transactional and deposit franchise out of a lending business, is likely to be African Bank’s toughest rival. With 9.2-million active clients, of which 4.1-million are primary bank customers, Capitec is way ahead of its challenger.

"We’re looking at everything in comparison to what already exists [in the market], but we must look different," Riley said, after announcing African Bank’s maiden set of full-year financial results since its curatorship.

The bank, which collapsed beneath its bad debts in August 2014, is over the worst and in a strong position.

For the year to September, it posted operating profit of R1.1bn, in comparison with R379m for the period April-September 2016. Full-year return on equity improved to 9% from 6.7%. "The core loans business is fixed," said Riley. The bank had achieved an average credit loss ratio of 12.7% for the year, down from 13.2% previously.

This compares with Capitec’s 11.9% for its most recent financial year and an average of 0.84% for SA’s other major banks. At the end of September, African Bank had 1.2-million customers, hoping to grow this to more than 2.5-million by 2021. Anecdotal evidence from branches suggested that loan customers were excited about the bank’s imminent transactional offering, CEO designate Basani Maluleke said.

It was also successfully drawing affluent customers, partly through a marketing campaign offering attractive interest rates on savings and investments, she said.

Its retail deposit book grew 148% to R357m, with five-year deposits amounting to 60% of new business.

By comparison, Capitec had retail deposits of more than R55bn at the end of August and a loan book of R46.5bn.

An earlier reduction in African Bank’s credit risk appetite led to a 9% decline in loans over the period to R8bn. Loans granted online increased 142% to R298m.

A JSE listing — the most likely exit for the bank’s current shareholders, which include the Reserve Bank, the Public Investment Corporation and SA’s major lenders — was not yet on the board’s agenda, Riley said.

With R10.1bn in available cash African Bank was fully funded for another 24 months.