Grindrod Bank eyes ATMs to aid social grant network
GRINDROD Bank says it is considering installing its own automated teller machines (ATMs), a move that would diversify its income and enhance the value of service it provides for the distribution of social grants in SA.
Grindrod is the bank behind Net1 UEPS, a technology firm that won a multimillion-rand contract to distribute social grants on behalf of the South African Social Security Agency (Sassa).
About 9.5-million people who receive grants use Grindrod cards to buy from retail stores and at ATMs. Grindrod MD David Polkinghorne said the 120% increase in the earnings reported by the company in the interim period to end-June had been boosted by the Net1 contract with the Sassa.
Mr Polkinghorne said the Sassa account was projected to contribute about 20% to Grindrod’s profit in the full year to end-December 2013.
Asked what the risks of losing the Net1 contract were in light of the fact that the Barclays Africa Group was contesting the award of the tender to Net1 at the Constitutional Court, Mr Polkinghorne said: “We are effectively a passive service provider. It’s taken a year to enrol the service to grant recipients. It would take another year or two to re-enrol.
It is a five-year contract and Grindrod is in its first year of the contract. Mr Polkinghorne said Grindrod was looking at strategies to preserve the contract and also at alternative ways to drive earnings.
He said rolling out ATMs was part of the strategy.
Grindrod is looking to list its UK property fund on the Jersey Stock Exchange in the middle of next year. The bank is mulling an inward listing of the property fund on the JSE.
Asked if Grindrod was considering an initial public offering, Mr Polkinghorne it had discussed the possibility of listing, but at the moment the bank did not need to raise capital through the equity markets. Last year, he said, Grindrod raised R500m for its lending book through a bond issue.
Grindrod has a loan book of R3.8bn. The book has grown more than six times since 2006, when it was R600m.
About 80% of the bank’s lending is in the property sector. However, Mr Polkinghorne said the bank did not offer loans for property development and home loans. It did finance commercial property acquisitions. The bank does not offer unsecured lending.
Grindrod lends to about 240 corporate customers and has deposits from about 2,000 customers.
It is considering acquiring its own stockbroking licence, Mr Polkinghorne said.
Grindrod was interested in building its exchange-traded fund platform, and was looking at opportunities in the rest of Africa These would be property orientated.