Full integrated annual report - African Bank - Investoreports

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36 Strategic review In this section Introduction Context Business environment Size of the market Market growth and competition Strategic themes Integrated strategy scorecard “My personal pledge is that I will have more passion for the job that I do and as a collector, I come across different people with different problems that lead them to be in arrears, I will put myself in their shoes, win them over, show them that I want to help them regain a good credit record in that way customers will want to continue doing business with the Bank and invite more customers to join and buy our products” Phumelele Sibiya – ABIL employee Integrated report 2011 | African Bank Investments Limited Introduction ABIL’s strategic vision is premised on strong growth over the medium term that ultimately translates into better value for customers. That vision will only become a reality through the continued commitment, energy and passion of our people, and their engagement and development is therefore central to the execution of this vision. Context of the ABIL strategy formulation process The ABIL strategy is anchored in strategic conversation at ABIL board level, and cascaded through the organisation via multiple governance levels including the ABIL group, African Bank and EHL executive committees and related divisions and teams. The ABIL board determines themes for the ABIL strategy conversation with the past year being characterised by technology, human capital, clients, scalability and growth. We have a clear governance structure around the delivery of strategy, consisting of board oversight, an executive director championing strategy, an ABIL group strategist, and a strategy team for analysis and strategic programmes. The board is tasked with the review and approval of strategy and the ABIL group executive committee responsible for the formulation and implementation of the ABIL strategy, while the divisional executive committees are responsible for their respective strategies. The business environment The economy has been in a slow and fragile recovery phase since the recession in 2009, with an estimated 2,9% growth in GDP and growth expected to reach 3,2% in 2011 and stabilising at 4% from 2013 onwards. A longer than expected slump in consumer demand resulted in a sharp drop in infl ation, from a CPI of 7,1% in 2009 to 4,2% in 2010. CPI is expected to average 4,3% in 2011. While the rand has been volatile, it does not have a material impact on the organisation except for imports at the retailer which are reasonably small. Sound hedging strategies alleviate the potential impact of the volatile currency. Most observers agree that job creation is the single most important lever to unlock the latent potential in the economy, yet job creation statistics have been disappointing. The government’s growth plan is anchored in job creation and to the extent that they become more successful, it would increase employment and consumer spending in the economy – the latter being a key dependency in our business. ABIL has a role to play in this regard. ABIL is regulated by the SA Reserve Bank (Registrar of Banks and NPSD/ PASA), the Financial Services Board, Financial Intelligence Centre, the JSE Limited and the National Credit Regulator. The group maintains interaction with regulators through frequent regulatory contact and submissions and through involvement in industry level engagements on pertinent legislative and regulatory issues. The regulatory environment has, at any point, a variety of reviews and potential changes ongoing and the current reviews are discussed in more detail in the regulatory risk section of the risk report.
ABIL manages its regulatory environment in a proactive and anticipatory manner. It actively participates in forums to debate proposed and required changes in regulatory requirements and ensures that it adapts its business model to new requirements well in advance of anticipated changes. The group is committed to conducting its business practices in a way that is fully compliant with both the intent and the letter of the full spectrum of laws and regulations that apply to us. Please refer to the regulatory risk section on our web-based risk report at http://africanbank.investoreports.com/africanbank_ar_2011/risk/ Size of the credit market At September 2011 Total loans Consumer credit Total SA economy R2,5 trillion R1,2 trillion Residential mortgages R846 billion (34% of total loans) Unsecured credit R113 billion (4% of total loans) R846 billion (70% of consumer credit) R113 billion (9% of consumer credit) The latest data shows that total banking loans and advances in the South African economy amounts to R2,5 trillion of which the consumer credit market is R1,2 trillion. Residential mortgages constitute 34% of the total loans and advances and 70% of consumer credit. The unsecured credit market segment that we target is only 4% of total domestic credit and 9% of consumer credit. It grew by close to 31% over the past year, yet remains a market in its infancy. Market growth and competition The implementation of the National Credit Act has fundamentally infl uenced the environment in which ABIL operates. Customers are relying more than ever on unsecured credit to fi nance their needs and to live the life they want. The unsecured credit market has grown 31% over the past year and competition has intensifi ed at the same time. We are reasonably comfortable that the growth in this market does not stem predominantly from more credit being extended to the same group of (potentially over- extended) customers. Unsecured credit is no longer an industry of small value, short term loans to moderate income customers. Loan sizes have increased, terms have become much longer and the strongest loan growth has been in the middle to higher income bands, traditionally the For industry statistics and related information, visit the National Credit Regulator website at www.ncr.org.za or The SA Reserve Bank website at www.resbank.co.za/ RegulationAndSupervision/ BankSupervision/Banking%20 sector%20data/Pages/Banks- BA900-Returns.aspx Source: National Credit Regulator Integrated report 2011 | African Bank Investments Limited 37
Page 1 and 2: Integrated report 2011 Giving peopl
Page 3 and 4: Contents ABIL in perspective Page S
Page 5 and 6: Operating structure ABIL is a publi
Page 7 and 8: Our values These are the basic beli
Page 9 and 10: Eyomhlaba, ABIL’s fi rst R600 mil
Page 11 and 12: Shareholders’ snapshot Top fund m
Page 13 and 14: High level risks R1 R2 R3 R4 R5 R6
Page 15 and 16: 2011 2010 Customers Number of custo
Page 17 and 18: Stakeholders’ issues Link to mate
Page 19 and 20: Stakeholders’ issues Link to mate
Page 21 and 22: 2006 2005 2004 2003 Defi nition 1 1
Page 23 and 24: Mojankunyane Florence Gumbi (52) Po
Page 25 and 26: Samuel Sithole (38)* Position Indep
Page 27 and 28: Izincwadi zababambiqhaza Matseno Po
Page 29 and 30: Izincwadi zababambiqhaza tšwetšwa
Page 37 and 38: The selection of issues was informe
Page 39: Strategic issue covered Risks cover
Page 43 and 44: Within the context of further build
Page 45 and 46: experiencing each other’s day-to-
Page 47 and 48: The Bank has made extensive headway
Page 49 and 50: Credit products EHL made good progr
Page 51 and 52: The rollout of this additional dist
Page 53 and 54: Financial review How ABIL generates
Page 55 and 56: Financial review continued Economic
Page 57 and 58: African Bank Investments Limited Co
Page 61 and 62: African Bank Investments Limited Gr
Page 67 and 68: Banking business unit Results at a
Page 69 and 70: Retail business unit Results at a g
Page 71 and 72: Retail business unit Financial stat
Page 73 and 74: Composition of the board The compos
Page 75 and 76: Remuneration report This is a conde
Page 77 and 78: Sign-on bonuses Sign-on bonuses are
Page 79 and 80: Risk management report This is a co
Page 81 and 82: Risk management mechanisms ABIL bel
Page 83 and 84: Mitigation Further detail ABIL cons
Page 85 and 86: Mitigation Further detail This moni
Page 87 and 88: Mitigation Further detail ABIL acce
Page 89 and 90: Listings information Listings excha
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Shareholders’ profi le Top fund m
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Analysis of preference shareholders
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Findings Based on our review of the
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Explanatory note On 1 May 2011, bei
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Percentage of voting rights require
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10. Special resolution 4 - amendmen
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12. Special resolution 6 - amendmen
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Percentage of voting rights require
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16.6 the minimum funding return (al
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c) the issued share capital and res
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19.3 Directions for obtaining a cop
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Jacobus Dorotheus Maria Gerardus In
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Remuneration policy of African Bank
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Annexure to the notice of AGM - Par
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(v) Share capital of ABIL Ordinary
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Application form: electronic partic
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Form of proxy African Bank Investme
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Summary of shareholders rights in r
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Corporate information Board of dire
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