| Wed 1 Aug 2007, 7:00 | | ABL - African Bank Investments Limited - Trading u |
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ABL ABLP
ABL
ABL - African Bank Investments Limited - Trading update
AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Registration number: 1946/021193/06)
(Ordinary share code: ABL) (ISIN: ZAE000030060)
(Preference share code: ABLP) (ISIN: ZAE000065215)
("ABIL")
TRADING UPDATE FOR THE THIRD QUARTER ENDING 30 JUNE 2007
The positive trading environment experienced for the first six months of the
financial year continued into the quarter ending 30 June 2007. Further price
reductions, a strong demand for credit and a smooth transition to the last
provisions of the National Credit Act (NCA) have translated into significant
growth in sales and advances, whilst credit quality has remained within expected
parameters.
The substantive provisions of the NCA became effective on 1 June 2007. ABIL has
been preparing for the NCA for the last 2 years and implemented many of the
changes required prior to the effective date. The remaining changes were
successfully implemented on the 1 June 2007 with no disruptions being
experienced. Accordingly, the month of June 2007 was business as usual,
resulting in sales of new loans for the month being 29% higher than June 2006,
despite a further tightening of credit criteria to higher risk clients.
One of the benefits of the NCA is the ability to extend loans for qualifying
clients beyond the R10 000, 36-months limit previously set under the Usury Act
Exemption Notice. In anticipation, ABIL has been shifting its portfolio to
larger, longer-term loans at lower prices over the past year. In June 2007, ABIL
further reduced prices (bringing the last remaining products under the price
caps set by the NCA) and extended the loan sizes and term limits for a number of
risk groups. This has resulted in a normalisation of the distribution of loan
sizes and the average term of loans granted has increased from 27 months to 30
months. Loans in excess of R10 000 comprised 15% of sales in December 2006, 17%
of sales in March 2007 and 57% of sales in June 2007.
Sales of new loans granted for the quarter grew by 32% over the equivalent
quarter last year, and grew by 23% in the nine months to 30 June 2007. The
growth in advances again exceeded the growth in sales and this trend is expected
to remain intact for the foreseeable future. Consequently, advances grew by an
annualised 34% in the nine months from R7,7 billion to R9,7 billion.
Asset quality has remained stable over the past quarter with vintages performing
within the group`s targeted range. Volume growth continues to be weighted
towards medium and low risk clients. NPLs as a percentage of gross advances at
26,6%, continued to reduce as a result of the rapid growth in advances
(September 2006: 28,6%) and NPL coverage remained steady at 64,2% (March 2007:
64,1%). Write-offs at an annualised 7,8% have started to normalise in line with
long-term trends. The national strike by government employees has had a
negligible impact on credit quality.
Operating costs and yields continue to perform in line with full year targets.
ABIL is confident that its growth strategies continue to bear fruit and that the
environment remains conducive to achieving the financial objectives it set for
the full financial year. Given the robust advances growth over the last nine
months, the group has revised its advances growth target for the full financial
year from 30% to approximately 34%, whilst the total yield earned on average
gross advances for the year is expected to fall by approximately 5%, in line
with previously communicated guidance.
On behalf of the board
1 August 2007
This announcement, together with a short presentation, is available on the
African Bank Investments Limited website at http://www.africanbank.co.za.
CONFERENCE CALL
Leon Kirkinis, CEO, will conduct a conference call for investors on Wednesday,
01 August 2007.
Participants are invited to download a slide presentation from the company`s
website prior to the conference call.
CONFERENCE CALL TIMES:
South Africa: 15:30
United States: 09:30 Eastern Time
United Kingdom: 14:30
Access numbers for participants dialling from their country:
South Africa Toll 011 535 3600
Toll Free 0800 200 648
United States Toll 1 412 858 4600
Toll Free 1800 860 2442
United Kingdom Toll Free 0800 917 7042
Board of directors
AS Mabogoane (Chairman), G Schachat (Deputy chairman)*, L Kirkinis (CEO)*, A
Fourie*, DB Gibbon, BD Goba, MC Mogase, R Naidoo, TM Sokutu*, BPF Steele,
GZ Steffens (German), DFG Tembe (Mozambique), A Tugendhaft, DF Woollam*
* executive
Group secretary: S Martin
Registered office: 59 16th Road, Midrand, 1685
Investor relations: Gary Rowe
Telephone +2711 256 9147
growe@africanbank.co.za
Share transfer secretaries
Link Market Services SA (Pty) Limited
11 Diagonal Street, Johannesburg, 2001
PO Box 4844, Johannesburg, 2000
Telephone +27 11 834 2266
africanbank@linkmarketservices.co.za
Date: 01/08/2007 07:00:06 Produced by the JSE SENS Department.
