CityPress - - Business - SIPHO MASONDO busi­ness@city­press.co.za

VBS Mu­tual Bank is pre­par­ing to ap­ply for a full com­mer­cial bank­ing li­cence to con­tinue its up­ward slide of ac­cu­mu­lat­ing as­sets and post­ing prof­its. It is also busy back­ing up its ag­gres­sive growth plans.

VBS is the bank that lent Pres­i­dent Ja­cob Zuma R7.8 mil­lion to re­im­burse the state for non­se­cu­rity up­grades made to his pri­vate home in Nkandla in KwaZulu-Na­tal.

In an ex­clu­sive in­ter­view with City Press this week, VBS chair­man Tshifhiwa Ma­todzi said when he and a group of black in­vestors ac­quired the bank in 2012, it was “an ob­scure and loss­mak­ing en­tity” hid­den in Tho­hoyan­dou in Lim­popo.

“We wanted to re­vive it as it is the only fully black-owned bank­ing li­cence in the coun­try,” he said.

“It was a re­gional bank and we saw an op­por­tu­nity to turn it into a na­tional bank.

“The turn­around strat­egy is go­ing very well. The rapid growth in the bank’s bal­ance sheet and pro­duc­tive di­ver­si­fi­ca­tion has re­sulted in VBS be­com­ing too big to re­main a mu­tual bank,” said Ma­todzi.

Be­cause of this, he said, it was no longer prac­ti­cal for the bank and the reg­u­la­tor that VBS be man­aged and reg­u­lated through the Mu­tual Banks Act.

He said pro­cesses to con­vert it into a com­mer­cial bank would com­mence in the next fi­nan­cial year.

The bank’s lat­est fi­nan­cial re­port, tabled at the com­pany’s an­nual gen­eral meet­ing in Tho­hoyan­dou last Fri­day, shows that VBS’s as­sets grew from R337 mil­lion in 2015 to R1 bil­lion last year and R2.1 bil­lion at the end of the cur­rent fi­nan­cial year, which ended in June.

Net profit be­fore tax has grown from R1 mil­lion in the group’s 2015 fi­nan­cial year to R5.9 mil­lion in the 2017 fi­nan­cial year.

The re­port also shows that the bank has about R920 mil­lion in cash re­serves, made up of about R800 mil­lion in hard cash and R120 mil­lion in­vested in short-term money mar­kets.

It also shows that the bank has fi­nanced con­tracts and home loans to the tune of R420 mil­lion and R323 mil­lion, re­spec­tively.

The two are also the bank’s best-per­form­ing prod­ucts.

VBS CEO Andile Ra­mavhunga said: “The bank has grown. It was mak­ing losses. We now have a na­tional foot­print. We have opened up a branch in Johannesburg’s cen­tral busi­ness dis­trict. Seven new branches are planned for 2018 and we have plans for of­fices in KwaZu­luNatal, Mpumalanga and North West.”


Ra­mavhunga said now that the turn­around strat­egy was com­pleted, the next phase would in­volve an ag­gres­sive growth strat­egy.

“We do not have am­bi­tions to com­pete with the big guys; we have a to­tally dif­fer­ent strat­egy and mar­ket,” he said.

“Grow­ing a bank or­gan­i­cally by open­ing up hun­dreds of branches, which, in turn, com­pete with each other is pro­hib­i­tively ex­pen­sive. That is not what we are go­ing to do. We are in the process of ac­quir­ing and launch­ing an IT sys­tem which will al­low our clients and cus­tomers to de­posit and with­draw money from a host of re­tail­ers across the coun­try.”

The bank, he said, planned to part­ner with tra­di­tional and in­dige­nous African churches and their mem­bers.

“We will differ from tra­di­tional banks that prob­a­bly have sin­gle ac­counts, with a few sig­na­to­ries, for most of th­ese churches.

“We will have the main ac­count, but ev­ery sin­gle mem­ber of our church part­ners will also have their own ac­counts and bank cards. Th­ese cards, which will be branded in the par­tic­u­lar church’s cor­po­rate colours, will also dou­ble up as the same church’s mem­ber­ship card.”

In De­cem­ber, VBS an­nounced a sim­i­lar part­ner­ship with the Twelve Apos­tles’ Church in Christ, which has branches all over the coun­try.

The truth, said Ra­mavhunga, was that the churches and their mem­bers banked a lot of money with tra­di­tional banks, but de­rived no value out of do­ing so as the banks re­fused to fi­nance the build­ing of churches and homes on com­mu­nal land.

We wanted to re­vive it as it is the only fully black-owned bank­ing li­cence in the coun­try


Ra­mavhunga said one of the rea­sons their home loan book was do­ing well was that the bank was pre­pared to fund the build­ing of homes on com­mu­nal land.

“Tra­di­tional banks do not do this. It is a de­lib­er­ate strat­egy on our part. Many cred­it­wor­thy clients who want to build fam­ily homes in ru­ral ar­eas, and who get re­jected by other banks, even­tu­ally come to us,” he said.

“It is te­dious and takes no less than six months to reg­is­ter a bond on com­mu­nal land, but it is pos­si­ble.”

A study com­mis­sioned by the bank, he said, re­vealed that it was nigh impossible for ru­ral folk to de­fault on their bonds.

“This is be­cause it is a fam­ily home that is owned by many peo­ple. If the bond­holder fails, other fam­ily mem­bers chip in and pay be­cause they all own the home. We have even dealt with the case of a man who has been jailed, but the monthly premiums have not stopped”.

Ra­mavhunga said the bank’s af­ford­abil­ity check in­cluded cri­te­ria such as the so­cial sta­tus of the fam­ily mem­bers of the ap­pli­cant.

“If a ru­ral man has five chil­dren who are engi­neers and doc­tors, he is un­likely to de­fault on his bond,” he said.

The bank plans to list on the JSE in less than five years.

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