African Bank

Finweek English Edition - - COMPANIES & INVESTMENTS - Marc Ash­ton

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.

Leon Kirki­nis

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.