African Bank earnings seen higher

Johannesburg - African Bank Investments [JSE:ABL] advised on Tuesday that both its headline earnings and earnings for the year ended September 2012 are expected to increase by between 17% and 19% relative to the R2.339bn reported for the 2011 financial year.

Similarly‚ headline earnings per share and earnings per share are expected to increase by between 17% and 19% from the 291 cents per share reported for the 2011 financial year.

ABIL said it had benefited from strong credit sales and advances growth through its expanded distribution and innovative products and a slower reduction in yield than in recent years. Cost growth‚ while higher than in previous years‚ remains well below revenue growth‚ resulting in positive operating leverage. The credit loss ratio was marginally up from that published in the interim results.

The Retail unit (EHL) experienced sluggish sales as the economy slowed and consumers came under increasing pressure. However‚ its improving efficiencies and solid margins helped maintain the positive momentum achieved through operating leverage in the first half of the year‚ it said.

“The group is comfortable that risk remains well controlled‚ from the perspective of the economic environment‚ recent legislative and regulatory developments‚ as well as credit quality. It is pleasing to note that the combination of regulatory scrutiny and heightened awareness by key players in the market have begun to curb excess supply of credit and that a slowdown of credit extension is evident in the most recent bureau information. ABIL's own underwriting interventions during the year have been successful in achieving the group's targeted risk adjusted returns and in further limiting its exposure to emerging risk in the market‚” it noted in a statement.

Its results are expected to be released on or about Monday‚ 19 November 2012.