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Cape Town - Residual Debt Services (RDSL) - effectively the old African Bank which was placed under curatorship in August 2014 - reported a loss of R646m for the six months ended March 31 2016.
This is compared to a loss of R2.787bn for the comparative six months ended March 31 2015. The bank’s loss was an improvement on the forecast loss of R2.091bn as published in February this year.
These interim results mark the conclusion of the successful restructuring and relaunch of the new African Bank, Tom Winterboer, curator of RDSL, said on Thursday.
In May the SA Reserve Bank released a report stating that, although there was no evidence that the business of African Bank Limited was conducted with the intent to defraud depositors or other creditors of the bank, the business of the bank was conducted negligently in certain respects. Furthermore, it was found that the board members were negligent in allowing themselves to be dominated by Leon Kirkinis, then CEO of Abil and the bank.
According to the latest interim results, net advances for the whole African Bank, including the good and residual books, as at March 31 2016 was R25.034bn, of which 83.9% was held for sale to new African Bank and 16.1% to remain in RDSL.
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According Winterboer, both the held for sale to Good Bank and RDSL books remain well provided for. He also said curatorship business, all of which is written for the account of new African Bank, continues to show stable and better early arrears.
He noted that these financial statements are the concluding numbers representative of the whole bank before the restructuring between the new African Bank and RDSL took place in April 2016.
He said the material reasons for the variation to the forecast included a lower actual impairment charge than was forecast. This is due to favourable shorter term variances and a larger than forecast debt counselling book, which partially offset the lower than forecast actual interest income reflecting the debt counselling book.
Another material reason for the variation to the forecast is that an actual stronger rand than was forecast resulted in lower actual foreign exchange losses. There were also lower actual restructuring costs than forecast, which were not included up to March 31 2016 and earlier than expected receipts on previously written-off inter-group balances.
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Winterboer emphasised, though, that the variances between forecasts and actual results do not change the conclusions reached on the resolution of the old African Bank and the implementation thereof, effective from April 4 2016.
Disbursements for the six month period to March 31 2016 increased 23% to R4.579bn compared to R3.723bn for the comparative period.
Winterboer said the positive performance was driven by increased advertising, improved internal processes and disbursements coming off a low base as a result of curatorship. Performance was, however, tempered due to the current macro-economic pressures, including inflation, lower credit appetite, increased retrenchments and further credit tightening measures.
Collections have stabilised at lower levels at an average of R1.829bn per month. This was on a reduced portfolio book, which resulted in improved credit quality migration. Early stage collections have also improved month-on-month, again demonstrating improved credit quality, in his view. Collections on the residual book have trended above the forecast projections, reducing on a monthly basis as expected.
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* At the same time, African Bank Investments Ltd (also known as ABIL) - not to be confused with the recently launched African Bank Ltd nor RDSL - reported a net profit after tax of R443m for the six-month period ended March 31 2016. The trading profits were generated exclusively by the company's only trading subsidiary, Standard General Insurance Company (Stangen). Earnings and headline earnings per share were 29.5 cents per share for the six-month period under review.
The total shareholder equity was R1.59bn as at March 31 2016 and according to a statement issued on behalf of Abil, the resultant solvency and liquidity ratios confirm the financial stability of the group.
The business rescue of ABIL ended on May 19 2016 as the business rescue practitioners had settled in full the creditors' claims totalling R1bn as existed at commencement of business rescue.
Following the successful implementation of the business rescue plan and final payment to creditors, ABIL has unencumbered cash reserves of R250m.
The current Board will convene an annual general meeting at which new directors will be proposed and voted on by shareholders.
