| Thu 6 Aug 2009, 7:05 | | ABL / ABLP - ABIL - Trading Update For The Third Quarter Ended 30 June 2009 |
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ABL ABLP
ABL
ABL / ABLP - ABIL - Trading Update For The Third Quarter Ended 30 June 2009
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" or "the group")
TRADING UPDATE FOR THE THIRD QUARTER ENDED 30 JUNE 2009
ABIL issues quarterly updates in order to provide investors with timely
insights into strategic and operational performance trends. These updates
cover certain key metrics but are not in themselves indicators of the
group`s profitability.
The quarter ended 30 June 2009 continued to be characterised by lower
overall economic activity, rising unemployment and a further deterioration
in consumer sentiment, with little immediate respite evident from lower
interest rates and declining inflation.
Given these circumstances, the group`s underwriting appetite remained
cautious. Greater emphasis was placed on controlling operating expenses and
the appropriate management of the group`s capital and liquidity position, in
addition to the ongoing revitalisation of the Ellerines retail offering and
the integration of its financial services activities into the African Bank
business unit.
African Bank
Gross advances increased by 5% over the quarter to R19.5bn, and by an
annualised 31% on a year-to-date basis.
Asset quality, as evidenced by the most recent vintage curves, deteriorated
modestly, reflecting a higher emergence of risk on business written during
the September 2008 to December 2008 period. Underwriting interventions
implemented in January 2009 have resulted in the more recent vintages
tracking back towards the historic underwriting range. NPL`s have risen
however, while yields have softened marginally ahead of expectations.
The more cautious approach to credit resulted in sales of new loans for the
quarter declining by 10% to R2.1 billion (Q3 2008: R2.4 billion),
translating into a year-to-date sales increase of 4% to R7.4 billion (2008:
R7.1 billion). Given the trajectory of sales in the most recent quarter, it
is likely that sales volumes for the full year will be in line with the 2008
base.
Operating expenses continued to be well controlled, which enabled gains in
cost absorption ahead of expectations. The group`s capital and liquidity
position remained conservative, with funding costs tracking expectations.
These factors, together with the strong customer gains in recent years,
enabled the African Bank business unit to achieve a higher operating result
for the nine months ended June 2009. Through different economic cycles, the
high degree of control inherent in African Bank`s business model continues
to ensure the stability of its financial returns.
Ellerines
Merchandise sales for the quarter ended 30 June 2009 were R935 million (Q3
2008: R1 088 million), down by 14% over the prior comparable period, albeit
off the lower store base, with like-for-like sales declining by 7%. This
resulted in year-to-date sales of R3 238 million (2008: R3 984 million),
55.2% of which was facilitated on credit (2008: 51.7%). The credit sales
mix improved in Beares, Furniture City and Geen and Richards, and was
relatively unchanged in the Ellerines brand.
Lower prices implemented across the group`s financial services products
reduced income yields, but remains core to the group`s strategy of providing
better value to its customers, despite the lack of volume elasticity in the
current economic climate. Retail margins were stable during the quarter.
Credit acceptance rates remained steady for the nine months ended 30 June
2009, at 66%, although the most recent quarter saw a reasonable recovery off
the low base of the prior comparable period.
Gross advances reflected the lower sales volumes, declining by 2% over the
quarter, to R5.2 billion. However, tighter underwriting criteria
implemented since acquisition, together with a greater focus on collections
management, resulted in a continued improvement in asset quality, as
evidenced in the most recent vintage curves.
While the improvement in asset quality as a result of better underwriting,
and further cost savings bodes well for Ellerines` medium term
profitability, current year returns are likely to remain weak, given the
lower sales base.
On behalf of the board
Midrand
6 August 2009
This announcement, together with a short presentation, is available on the
African Bank Investments Limited website at http://www.abil.co.za.
CONFERENCE CALL
ABIL management will conduct a conference call for investors, fund managers
and analysts on Thursday 6 August 2009. The conference call will take the
form of a short presentation, followed by questions. Interested parties are
invited to download the presentation from our website prior to the
conference call.
CONFERENCE CALL TIMES
South Africa: 16:00pm
United States: 09:00am Eastern Time
United Kingdom: 15:00pm
Access numbers for participants dialling from their country:
South Africa +27 11 535 3600
United States 1800 860 2442
United Kingdom 0800 917 7042
PLAYBACK
A replay of the recording will be available for 48 hours should you be
unable to participate in the call and wish to listen to the trading update.
To access the replay please call the number below followed by the code
2134#:
South Africa +27 11 305 2030
USA 1 412 317 0088
UK 0808 234 6771
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 06/08/2009 07:05:03 Produced by the JSE SENS Department.
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