Publications
Partners
Cape Town - The JSE was in shock after shares of African Bank Investments [JSE:ABL] (Abil) tumbled more than 80% to almost a 20-year low of 50 cents on Thursday.
This came after the struggling mass-market lender warned on Wednesday it would fall to a full-year loss of R6.4bn, and said its chief executive would step down after more than 20 years.
But African Bank's CEO Leon Kirkinis shouldn't carry sole blame for the implosion, says Fin24 columnist Mzwandile Jacks.
Fin24 users are divided on the topic. Deon Lowe says: "African Bank only has themselves to blame for the reckless loans that they just 'hand out', and to top this they charge a ridiculous interest rate, and they know it.
"They have targeted the poor and they deserve what is coming to them."
Lowe says he was "astounded to find out" from several Abil clients, who have loans with the lender, that they are in fact living below the bread line. He provides a breakdown of a client's budget as an example:
Net salary: R9 100
Loan: R5 100 x 74 months
Credit card: R950 p/m
"You do the sums," says Lowe. "What happened to the affordability clause?"
Fin24 user AsGodIsMyWitness disagrees, pointing out that Abil was actually "providing credit to people the banks would not service".
He says: "Without Abil these people would never get credit. The banks don't know better; before you all claim they do, they simply categorised an entire segment of the population as risky, not fitting their credit scoring models."
Abil, it must be accepted, "offered something to the forgotten segment of the population". Moreover, their fees were geared to cater for the risk, and there was a "mutually beneficial relationship between customers and Abil" for 23 years.
"Don't flay them now because the model failed. Even good business models have failed because of events outside their control."
South Africa "needs more Abils... who service the bottom-end of the financially well-off market," says AsGodIsMyWitness.
- Fin24
*Are you an Abil client and if so, how does the implosion affect you? Let us know and you could get published.
Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.
This came after the struggling mass-market lender warned on Wednesday it would fall to a full-year loss of R6.4bn, and said its chief executive would step down after more than 20 years.
But African Bank's CEO Leon Kirkinis shouldn't carry sole blame for the implosion, says Fin24 columnist Mzwandile Jacks.
Fin24 users are divided on the topic. Deon Lowe says: "African Bank only has themselves to blame for the reckless loans that they just 'hand out', and to top this they charge a ridiculous interest rate, and they know it.
"They have targeted the poor and they deserve what is coming to them."
Lowe says he was "astounded to find out" from several Abil clients, who have loans with the lender, that they are in fact living below the bread line. He provides a breakdown of a client's budget as an example:
Net salary: R9 100
Loan: R5 100 x 74 months
Credit card: R950 p/m
"You do the sums," says Lowe. "What happened to the affordability clause?"
Fin24 user AsGodIsMyWitness disagrees, pointing out that Abil was actually "providing credit to people the banks would not service".
He says: "Without Abil these people would never get credit. The banks don't know better; before you all claim they do, they simply categorised an entire segment of the population as risky, not fitting their credit scoring models."
Abil, it must be accepted, "offered something to the forgotten segment of the population". Moreover, their fees were geared to cater for the risk, and there was a "mutually beneficial relationship between customers and Abil" for 23 years.
"Don't flay them now because the model failed. Even good business models have failed because of events outside their control."
South Africa "needs more Abils... who service the bottom-end of the financially well-off market," says AsGodIsMyWitness.
- Fin24
*Are you an Abil client and if so, how does the implosion affect you? Let us know and you could get published.
Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.
