| Wed 16 Apr 2003, 10:27 | | Imperial Bank lending book boosted 65% to nearly R |
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Group benefits from a more diversified approach
Financial Services Editor
IMPERIAL Bank grew its lending book by 65% to R8,8bn last year as it branched out beyond Imperial Holdings car dealerships to target the whole of the market.
The bank, set up seven years ago by Imperial Holdings, became a joint venture between Nedcor and Imperial in 2001.
It focuses on asset finance, with car, property and aviation finance operations and increased headline earnings 94% to R143m in the year to December. The car division grew its book 67% to R3,4bn and contributed 25% of the bank's attributable income.
It had initially marketed its products only to Imperial group dealers, who sell about 15% of SA's motor cars. But Imperial Bank MD Tak Hiemstra said the division benefited last year from a decision taken late in 2001 to market outside the group, striking up relationships with other dealerships to target the whole market.
It had also increased its share of Imperial group business. The bank now has about 7% of the market for dealer-based car finance, well behind industry leaders Wesbank and Bankfin, but aspires eventually to be up there with the leaders.
Hiemstra said it had huge scope to grow.
It has not lent to large corporates but is now gearing up to get into fleet finance, says Hiemstra.
The bank's property book also showed strong growth, increasing by 83% to R2,5bn.
Hiemstra said the growth was off a low base and the bank had put a lot of energy and resources into property finance, which focuses on longterm commercial mortgages and residential development finance.
Property contributed 26% of the bank's income.
Growth in aviation finance was more muted, with the book up 31%.
The bank says in its annual report that given the size of the aviation market, in which Imperial already holds a dominant share, the book is expected to stabilise and grow with the market.
About 90% of the new aviation business written comes from existing clients. The bank says in its annual report that management is well aware of the implications for risk management posed by high asset growth, but has followed a conservative credit policy.
It increased bad debt provisions to 2% of average advances, from 1,4% the previous year.
The bank's cost to income ratio fell to an impressively low 31,8%, from 36,4% in the previous year. "We run a very frugal business," Hiemstra said.
During the year, the bank bought the Planet Finance book from the Saambou curator.
Hiemstra said without this, Imperial Bank's advances growth would have been 55%. The bank's capital adequacy ratio stood at 12,1% at end-December down from 13,5% a year before.
Apr 16 2003 06:50:01:000AM Hilary Joffe Business Day 1st Edition
Wednesday
16 April 2003
