ABIL(ity) to grow
MICROLENDER CEO Leon Kirkinis has put pedal to the metal in getting African Bank Investment Limited (ABIL) back on track, having faced muted growth in sales and credit extension due to depressed consumers on the back of the recent economic crisis plus the complex restructuring of Ellerine financial services into an integrated ABIL.
The group has embarked on an aggressive drive to improve sales, credit extension and advanced growth through a higher client base and improved penetration/ reach, which has led to the introduction of new products to consumers that include a “payment break” product that enables consumers to access a greater amount of credit than previously, and piloting a rollout of ABIL-branded ATMs – the first being installed in September 2010.
Adding a sweet touch to the ABIL investment case is the recently acquired Ellerine, whose earnings were up 35% for the 12 months to September 2010. Local retail (the sector in which Ellerine primarily operates) sales growth figures have increased at 6,1%, confirming consumer spending is reviving. Specific to the Ellerine product and service offering, domestic household and furniture and appliance sales growth came out at a stellar 17,1% in December. That – alongside the company’s intentions to double sales in 2011 through reduced prices, cost of credit and insurance from high Ellerine levels – will ensure they grow the size of their market share and the scale of their credit markets.
Analysts say recent consumer spending (a big driver of the economy) figures are good enough to convince the SA Reserve Bank to keep rates unchanged when committee members reconvene later this month. The low inflation and interest environment, coupled with above-inflation salary increases, positions ABIL well to benefit from the resultant increase in disposable income.