African Bank transactional system on track

African Bank’s core transactional banking system is fully operational, with a roll-out expected within the first quarter of 2018.

Presenting the bank’s results for the six months to end-March 2017, CEO Brian Riley said on Tuesday that the core digital transactional banking platform was fully operational on a closed user-group basis, with the user interface technology layer under development.

Gavin Jones, head of treasury and balance-sheet management, said the bank, which came out of curatorship in April 2016, was well capitalised for the move.

“The bank started on April 4 [2016] with R10bn in capital,” he said.

This was provided by the Reserve Bank, the Public Investment Corporation and a consortium of the six largest banks. However, questions have arisen about when the consortium could exit the bank.

“Capital is not a loan; it’s not a question of paying back,” said Jones. “This transaction [the consortium taking a 25% share in African Bank] was specifically approved by the Competition Commission.”

The lender has approved R329m to invest in new ventures, such as the transactional bank, but operational costs were still flat at R1.2bn compared with the previous six months.

It reported a 32% rise in R501m in normalised profit before tax and foreign exchange losses for the reporting period.

Loans granted fell 4% to R4.4bn as economic pressure hit customers, coupled with more stringent credit regulation and risk aversion on the part of the bank. The size of the loans, however, increased from an average R18,700 in the third quarter of 2016 to R31,567 in the second quarter of 2017 , with an average of 36 months to pay from 27 months previously.

“This is somewhat controversial,” said chief financial officer Gustav Raubenheimer.

“We are asked why are you increasing credit size? The answer is that they are higher quality.”