Full annual report - African Bank - Investoreports

Of the credit cards issued in 2012, 51% were sold to new
customers of the Bank. The Bank pulled back on high risk
groups for this product during the year, which manifested in
credit card disbursement growth slowing down substantially
from previous years. However, the significant base of credit
card holders that has been built up over the past few years
and their card utilisation contributed to a healthy growth of
40% in credit card advances.
The Banking unit’s consolidation loan is utilised partly as a
defensive strategy against larger capital propositions by
competitors, but also to assist our customers to improve their
overall affordability and financial health. The Bank sold
R6 billion of these loans to 186 000 customers, of which 81%
were existing customers.
The Interest Buster product resulted in disbursements of
R889 million to 244 000 customers during the past year.
Average loan size for this product is R3 500 with a term of less
than 12 months. Of the customers who took up the product,
40% were new to the Bank.
The Payment Break product was again launched to coincide
with the 2012 festive period. A further benefit has been
added that the customer could get a break every December,
based on payment performance. The product is aimed at
repeat customers for whom we have a proven payment
history. Only 28% of customers who were offered this product
during the year were new and they received 19% of total
capital disbursed. EHL will also offer a Furniture Payment
>business overview
Of the credit
cards issued
in 2012, 51%
were sold to
new customers
of the Bank
Break product and a Personal Loan Payment Break product
for the first time.
The vehicle finance pilot is progressing cautiously. African Bank
has to date financed some 1 350 cars and has generated a
vehicle finance loan book of R132 million across 80 dealerships.
Insurance is core to strengthening the customer value
proposition as a “good faith friend”. As part of its initiatives in
this regard, the Banking unit has been piloting a funeral
insurance product which guarantees to pay out within
24 hours. The product has been well received and the group is
investigating other insurance related and value adding
product enhancements for customers.
Gross advances increased by 33% to R53,0 billion (2011:
R39,9 billion) on the back of the growth in new business
volumes and extension of term. Traditional African Bank
advances increased by 33% to R37,0 billion, the credit card
book grew by 40% to R7,3 billion on the back of new cards
issued as well as R1,8 billion of card utilisation, which is not
captured as disbursements. EHL furniture credit advances
grew by 25% to R8,7 billion.
Financial services activities in the Retail unit – Gross
advances in the 77 non-South African furniture stores increased
by 12% to R393 million (2011: R350 million). Non-performing
loans constituted 15,5% (2011: 17,4%) of the advances book,
with total impairment provisions of R46 million representing a
coverage of 75% of non-performing loans.
African Bank Investments Limited | Integrated Report for the year ended 30 September 2012 71