Finbond to open 80 new branches

FINBOND, SA’s youngest retail bank, plans to open about 80 new branches by February next year and after that roll out about 200 branches over five years as part of its growth plans.

FINBOND, SA’s youngest retail bank, plans to open about 80 new branches by February next year, and after that roll out about 200 branches over a five-year period as part of its growth plans.

It is also investigating options for a black economic empowerment (BEE) deal to improve its credentials, the company’s annual report, released on Friday, shows.

At the end of its financial year in February this year, Finbond had 200 branches compared with 172 in the previous year.

Out of the 200 branches, 72 are in Gauteng; 44 in KwaZulu-Natal; 33 in the Western Cape; 23 in the Eastern Cape; and 28 in the Free State and the North West. The company seemingly does not have a branch presence in the Northern Cape.

The expansion, if successful, is likely to double the branch network over the next five years. Finbond is looking to grow its footprint nationally as it looks to launch transactional banking towards the end of this year.

“We intend to open 60-80 branches in the next financial year and thereafter approximately 40-60 branches per year for the next five years,” its annual report said.

Finbond’s annual report shows the company acquired eight more branches from Mancorp Finance on March 24 through its wholly owned subsidiary, Blue Chip Finance 1.

“This country needs more competition. Obviously they would be aiming to take market share from players. They have seen Capitec do it and they think they can,” Imara SP Reid research head Stephen Meintjes said on Friday.

Last month, Finbond did a deal with PSG Private Equity and acquired African Unity Holdings, which owns African Unity Insurance. The acquisition of the life and health insurer allowed Finbond to diversify its income streams and broaden the client base in which it can sell its loans. African Unity Holdings has more than 1.3-million members.

As a microlender, Finbond has a market share of about 12% in the short-term unsecured loan market: these are loans below R8,000, and with a tenure of between 30 days and 180 days. The bank said it was mainly funded through fixed-term retail deposits of between six and 72 months. It had received R695m worth of deposits from customers at the end of February.

The lender said it had a portfolio worth about R242.6m in development properties held as long-term investments. “The intention is to realise a profit over the medium to long term and to invest the cash realised into the micro finance business,” the annual report said.

Finbond has ambitions to improve its level 7 broad-based black economic empowerment (BBBEE) status to level 4 by 2017. “To this end we have commenced the process to investigate a number of BBBEE transaction options for Finbond Group Limited,” the company said.