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African Bank Retail
African Bank Retail has committed itself to continuing
to be the change agent to ensure that the industry
fosters responsible lending.
Business scope
African Bank Retail comprises the major
lending operations under the African
Bank brand, as well as the insurance
underwriting activities of Stangen, the
Standard Bank joint venture and the
performing portion of the Saambou PLB.
African Bank Retail supplies short-term,
unsecured credit to moderate income
earners. Personal loans granted are
mostly used for housing, education
and debt consolidation. The creditgranting
process involves credit scoring
and risk assessment, and extensive
affordability calculations.
African Bank Retail has been at the
forefront of lending to the moderateincome
market. It has some one million
clients and uses fixed branded branches,
mobile sales consultants, and telephonic
channels to distribute products to its
clients. It operates through its own
branded distribution network of
branches and regional sales offices
throughout South Africa. In addition,
African Bank has a joint venture with
African Bank Retail
Standard Bank to sell African Bank loans
through its branches.
Stangen is the entity in the African Bank
Group through which all assurance
initiatives are conducted. Stangen is
registered as a long-term insurance
company and has a licence to market
credit life and level life policies.
Overview of the past year
Financial overview
African Bank Retail increased its headline
earnings by 40,0% to R599,9 million
(2002: R428,6 million) This increase was
as a result of:
higher sales and increased margins;
improved business conditions, lower
bad debt charges and cost
containment; and
a positive contribution from the
Saambou PLB.
Sales and advances
In 2002, the division tightened its credit
criteria in reaction to heated market
conditions resulting from the failure of
UniFer and Saambou. As a result, loan
performance, on a vintage basis, has
been improving steadily. In 2003,
African Bank Retail’s credit quality and the
overall market environment improved to
the point where a controlled and gradual
relaxation of credit was considered
appropriate. As predicted, sales have
started to pick up, increasing by 17,0% in
the lending books. The increased sales
are attributed partially to new products
that have been introduced during the
course of the financial year and to the
gradual relaxation of the credit criteria.
The number of new loans sold increased
by 22,4% with some 60% sold to repeat
clients. The improved sales trend is
expected to be maintained into 2004 and
processes are in place to closely monitor
the resultant credit quality.
The division’s primary products are payroll
and debit order retail loans. This year saw
a marked shift in portfolio product mix,
with the dominant product shifting from
payroll to retail loans. New debit order
collection platforms have been deployed
and focus was also placed on improving
Total advances Rm 5 361,0
Number of clients 000 1 014,8
Number of branches 222
Number of permanent employees 1 144
Turnover for the year Rm 2 215,7
Average size of new loans R 5 980
Average term of new loans months 19
Average gross yield % 47,4
Bad debt charge % 6,4
Cost-to-income ratio % 31,3
African Bank Investments Limited 38