| Thu 4 Aug 2011, 7:05 | | ABL/ABLP - African Bank Investments Limited - Trading update for the |
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ABL ABLP
ABL
ABL/ABLP - African Bank Investments Limited - Trading update for the
third quarter ended 30 June 2011
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 2011
ABIL issues quarterly updates in order to provide investors with timely
insights into strategic and operational performance trends. These updates
should be viewed as guidance on trading conditions, rather than providing
an indication of profitability. Ellerines Financial Services was
incorporated into African Bank at the end of the previous financial year.
As a result, all comparatives in this announcement refer to the adjusted
pro forma results after the integration of the two businesses.
Real salary increases continued during this period, yet low manufacturing
production growth, high food inflation, announcements of retrenchments
and subdued consumer spend indicate that the economy remains fragile.
This was particularly evident in the retailing environment, while in the
credit environment the stronger sales trends in the first half of the
year continued, with a noticeable shift towards lower risk customers.
Operationally and strategically, the group made good progress towards its
medium term goals during this quarter. It expects a steady performance in
the last quarter of the year.
African Bank
Credit disbursements for the nine months ended June 2011 were R15,5
billion, a 53% increase relative to the previous comparable period. The
rapid expansion of the distribution network through Ellerine Holdings Ltd
(EHL) kiosks and carve-outs, the new products launched in this financial
year, an increase in the maximum size of loans to low risk clients and a
strongly motivated sales force, all contributed to this performance.
The number of loan applications for the nine months increased by 34%
relative to the same period in 2010, while offer rates were kept steady
at 76%. The average loan size for the nine months to June 2011 was R9
994, an increase of 25% relative to the prior period. Term increased from
42 to 45 months.
Gross advances grew by 28% to R37,1 billion on a year-to-date basis (or
31% year-on-year), on the back of the higher sales. The credit card
portfolio increased by 56%, while EHL advances growth accelerated to 33%
for the nine months. Total income yield remained steady relative to the
yield reported at the interim stage, despite shifts in the sales mix
during the quarter towards larger, longer-term and lower yielding loans
for low risk clients.
Operating costs increased in line with the first half of the year, mainly
as a result of volume growth.
Non-performing loans (NPLs) as a percentage of advances continued to
reduce, largely as a result of the 36% growth in performing loans, while
NPL coverage remained steady relative to the corresponding period.
Vintages have started tracking higher on the back of the strong sales
growth, in line with expectations.
The initiative to maximise credit volumes and revenues from the EHL
network made good progress. To date, a total of 90 kiosks and 90 carve-
out branches have been opened, generating R593 million of additional
credit sales over and above furniture credit. In total, the contribution
of non-furniture credit from this network now exceeds R1 billion for this
financial year.
African Bank Limited issued a US$300 million five year bond in June 2011,
the first listed bond issued under African Bank`s USD1 billion Euro
Medium Term Note programme. ABIL also raised R243 million in perpetual
preference shares in July 2011, which was applied towards the
subscription of an ordinary share in African Bank to augment its capital
in this high growth phase.
Ellerines
EHL recorded merchandise sales of R3,5 billion for the nine months to 30
June 2011, a 4% increase relative to the previous comparative period.
Comparable sales (on a square metre basis) were 8% higher than last year.
Sales in the third quarter were impacted by fewer trading days, the
timing of the various public holidays and the elevated base as a result
of the 2010 World Cup.
Merchandise sales growth per brand
Y-on-Y sales growth Comparable sales growth
% %
Ellerines 15 22
Beares 2 6
Furniture City (20) (17)
Geen & Richards (1) (4)
Wetherlys (10) (5)
Dial-a-Bed 2 (7)
Ellerines Group 4 8
The credit sales mix increased from 59% to 64% in the period under
review. Gross margins continued to firm over the period. Operating
expenses growth tracked at similar levels to the first half of the year,
with the most significant increases being attributed to higher credit
sales commissions, higher fuel costs and increased property costs.
All productivity measurements continued to improve on the back of the
increased sales, albeit at a slower pace. Year-to-date stock turn was
marginally better than last year`s. As of June 2011, EHL opened a net 23
new stores, over and above the African Bank carve-outs and kiosks
installed in the period, although square metres continue to decrease.
On behalf of the board
Midrand
4 August 2011
This announcement, together with a short presentation, is available on
the African Bank Investments Limited website at http://www.abil.co.za.
ABIL will hold a conference call on Thursday, 4 August 2011 for
interested parties. The conference call will take the form of a short
overview of the quarter, followed by questions. A slide presentation
covering the overview will be available for download prior to the call on
www.abil.co.za
Time 16:00 (South Africa standard time)
14:00 (UTC/GMT)
LIVE CALL PLAYBACK (available for 48
hours)
Code 2134#
South Africa & Other
Toll 011 535 3600 South Africa & Other
011 305 2030
USA
Toll-free 1800 860 2442 USA
1 412 317 0088
UK
Toll-free 0800 917 7042 UK
0808 234 6771
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 04/08/2011 07:05:01 Produced by the JSE SENS Department.
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