R624m Loss But Capital Ratio 25.8% Keeps African Bank Standing

Source: Supplied. Zweli Manyathi, African Bank interim group chief executive officer.

The bank said the period reflects a shift away from acquisition-led expansion towards operational consolidation, as it works to integrate businesses acquired over the past five years and extract value from its expanded retail and commercial banking platform.

The group said that while its acquisition-led strategy over the past five years has expanded its footprint and capabilities, the earnings contribution from these businesses has taken longer than expected to materialise.

Results reflect pressure

Since 2022, African Bank has completed several strategic acquisitions, including Ubank, Grindrod Bank, and Sasfin’s Capital Equipment Finance (CEF) and Commercial Property Finance (CPF) businesses. These deals were aimed at strengthening its secured lending capabilities, broadening its customer base and improving funding diversity.

However, the bank said the focus now shifts to embedding these capabilities and unlocking operational synergies across the enlarged group.

“Over the past five years, we have built a competitive retail and commercial offering through strategic acquisitions, investment, and capability-building. Our focus is now on extracting value from those investments and creating a more efficient, scalable business capable of delivering sustainable long-term growth,” says Zweli Manyathi, interim group chief executive officer.

Total net income from operations before impairments and costs came in at R3.3bn for the period.

Interest income on advances of R3.7bn remained broadly stable compared with the prior period, supported mainly by growth in the business and commercial lending book.

Non-interest income declined 39% to R550m, down from R909m previously, driven largely by fair-value losses compared with gains in the comparable period.

Credit-impairment charges rose to R1.8bn, reflecting continued pressure in the credit environment. The group said it remains focused on disciplined credit-risk management, supported by portfolio optimisation and recovery initiatives.

Operating expenses remained broadly unchanged at R2.3bn, with cost-containment efforts offset by weaker revenue performance. As a result, the group’s cost-to-income ratio increased to 70%.

Capital strength endures

Despite the loss, African Bank maintained a strong capital position, with its capital adequacy ratio at 25.8%, well above regulatory requirements.

Customer deposits increased 18% year-on-year, while group funding rose 23%, supported by continued access to diversified funding channels. Liquidity reserves increased to R6.6bn.

The bank said this capital strength provides a foundation for the next phase of its strategy, which is focused on integration, efficiency and value creation across its expanded platform.

African Bank reiterated that its “Excelerate” strategy was designed to transform the group into a diversified financial-services institution through targeted acquisitions, systems investment and product expansion.

It said the current phase will focus on simplifying operations, improving productivity and realising synergies across the combined business.

African Bank noted that successful execution of this consolidation phase will support its longer-term ambition of a potential future listing.