African Bank reports 38% increase in active customer base to 5.7mn

African Bank Group's CEO, Kennedy G. Bungane, recently discussed the financial results for the bank, showcasing a 38% increase in the active customer base to 5.7 million. The bank's Accelerate 25 strategy, aimed at diversifying its business model, is showing promising results post last year's acquisitions and internal operational efficiencies. The net advance stand of 32.7 billion reflects a slight 1% growth in unsecured lending, with secured business banking loans contributing significantly to the balance sheet. Bungane emphasized that the results indicate steady progress in achieving the objectives of the Accelerate 25 strategy by moving beyond being solely an unsecured lender to focusing on secured and purpose lending. Despite a 5% decrease in unsecured lending, a 13% growth in secured lending has led to a more diversified and de-risked balance sheet for the bank, enhancing sustainability and scalability. One notable highlight from the financial results is the considerable increase in transactional income, signifying a shift towards customers engaging in day-to-day banking activities. This shift towards diversified revenues and a de-risked balance sheet has positioned African Bank as a more stable and reliable entity in the financial sector. The CEO highlighted the significance of African Bank's entry into business and retail deposits, noting that the bank now holds over 34 billion in deposits, primarily sourced from consumer and business customers. This shift has substantially reduced the bank's cost of funding and established a more stable funding base amidst high-interest rates in South Africa. Furthermore, the surplus liquidity of 7.9 billion and high capitalization underscore African Bank's scalability and sustainability as a business. This surplus liquidity, along with strong capitalization, provides the bank with flexibility for continued growth and reinforces its goal of becoming a customer-centric, digitally-enabled institution with a robust retail and commercial offering. Bungane also discussed the bank's commitment to supporting small and medium-sized enterprises (SMEs), aligning with its founders' vision of backing entrepreneurs. Through strategic acquisitions and enhanced product offerings, African Bank aims to bolster its support for SMEs and entrepreneurs who are often underserved in the market. The CEO reiterated the bank's focus on regulatory changes that enable them to better serve the SME segment. He highlighted upcoming regulatory approvals for an end-to-end digital lending and credit risk SME offering that will enhance convenience for entrepreneurs banking with African Bank. Operationally, Bungane explained that the shift in the balance sheet towards a more diversified lending portfolio has impacted the net interest income. While unsecured lending decreased by 5%, secured lending growth and non-interest income from insurance and investment businesses have offset the decline, leading to a more sustainable revenue stream. As African Bank continues to navigate the evolving financial landscape, the focus remains on driving growth, enhancing customer experience, and supporting the SME sector. The bank's strategic initiatives and financial resilience position it well for long-term success and value creation for stakeholders.