JSE-l i sted microlending and financial services group African Bank Investments Limited (Abil) is still struggling to reassure shareholders despite votes of confidence from high-profile asset managers.
Last week Abil announced the release of a trading update for the quarter ended 31 December 2013. Key metrics from the bank included the fact that year on year, disbursements had declined 25% while the average loan size was up 11% to R13 559.
Abil CEO Leon Kirkinis told shareholders: “The group has emerged in a stronger position from an extremely challenging year and has now entered a new chapter in its history. Our strategic actions undertaken in 2013 and the improvement in the quality of new business written is expected to produce improved results in the second half of FY2014.”
While this sounds like positive steps have been taken, the share was knocked down almost 4% after the release. This was attributed to the fact that the language being used around retail unit Ellerines had changed. Where Ellerines was being treated as an asset that was up for sale, Abil spoke quite deliberately about ac t i ons t hat t he company was taki ng to enhance operations.
Institutional investors appear split as to the prospects for the group. The Public Investment Corporation (PIC) increased its holding in the ordinary shares of the company from 14.982% to 15.327% while Coronation Asset Management has upped its exposure from 19.94% to 20.19%. This represents a significant underpin to the share price.
The key issue facing Abil will be its ability to correctly assess risk in the coming years. This month, South Africa saw a surprise interest rate hike, which was followed shortly by the petrol price reaching a record high. These factors coupled with strikes in the platinum sector may well continue to weigh on the group in the near term.