Full integrated annual report - African Bank - Investoreports

Financial review continued
is a risk that the actual claims will exceed the expected claims and premium income received. The risks are
managed through product development and underwriting processes, including the actuarial assessment of
the level of premiums on a regular basis.
The non-interest income earned is mainly from loan origination and service fees, credit card fees and
delivery charges. Loan origination and service fees are earned from granting personal loans and credit to
purchase furniture. Credit card fees are generated through monthly fees on banking transactions by individual
customers at ATMs and point of sale devices. Delivery charges are earned on transporting goods sold to the
customer’s required location. Origination, service and credit card fees are subject to the same credit risk as
interest income on funds advanced.
Financial results
The group’s fi nancial performance in the year ended 30 September 2011 was driven by a variety of new
products and channels as well as high levels of commitment, energy and innovation from our staff, which
culminated in robust growth despite a modest trading environment. The performance was augmented by the
substantial increase in African Bank’s footprint through the EHL network.
While ABIL group results are not affected, the results for the individual business units are not directly
comparable with those of 2010 as the profi ts of Ellerines Financial Services were previously included in
the Ellerines business unit and have been incorporated into the Banking unit for the fi rst time this year.
Comparatives have been adjusted on a pro forma basis throughout the reporting to facilitate trend analysis.
Features
ABIL achieved a return on equity of 18,4% for the year to 30 September 2011 (2010: 15,6%) and an
economic profi t, after charging for its cost of equity, of R494 million (2010: R78 million).
Headline earnings increased by 24% to R2 339 million (2010: R1 890 million) as did headline earnings per
share to 291,0 cents (2010: 235,1 cents).
A fi nal ordinary dividend per share of 100 cents (2010: 100 cents) was declared, bringing the total
dividend for the year to 185 cents per share (2010: 185 cents). A fi nal preference dividend per share of
310 cents was declared (2010: 336 cents) resulting in a full-year preference dividend of 620 cents per
share (2010: 691 cents).
The Banking business unit grew headline earnings by 24% to R2 302 million (Pro forma 2010: R1 863 million),
benefi ting from substantial sales and advances growth, a slower reduction in yield than in recent years,
and steady asset quality. Return on equity improved from 19,7% in 2010 to 22,9%.
The Retail business unit’s headline earnings grew by 46% to R190 million (Pro forma 2010: R130 million),
supported by modest increase in sales, fi rm margins and operating leverage from more effi cient operations.
EHL generated a return on equity of 6,9% (2010: 4,8%).
R million
2 500
2 000
1 500
1 000
500
0
1 334
07
1 519
08
Headline earnings
50 Integrated report 2011 | African Bank Investments Limited
1 810
09
1 890
10
2 339
11
R million
1 200
1 050
900
750
600
450
300
150
0
-150
1 004
07
Economic profit/loss
323
08
(95)
09
78
10
494
Note: ABIL acquired Ellerine Holdings Limited in 2008
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