Latest news with #AfricanBank
The Citizen
a day ago
- Business
- The Citizen
Report reveals there is no lack of funding for small businesses – here's the problem
Being funding-ready is just as important as funding availability. A report has revealed that there is no shortage of funding for micro, small, and medium enterprises (MSMEs) in South Africa; however, the challenge is that traditional lending models make it more difficult for these businesses to secure approval. The report, titled 'SA MSME Access to Finance Report 2025', by Finfind and African Bank, released on Thursday, supports the belief that change is needed to address the funding gap for these businesses. MSMEs in the country play a significant role as the majority of the workforce is found within the segment. These are businesses with a turnover of less than R1 million per annum. ALSO READ: Finding the right funding option for your small business Addressing funding methods The report stated that the inability of small businesses to secure funding remains a significant barrier to entrepreneurship, business expansion, and broader economic growth in the country. One of the reasons small business owners struggle to secure funding is that they are seen as high-risk without collateral. The report shows that these owners also struggle to access personal finance as most do not have a regular monthly income paid into their personal bank accounts to confirm income and affordability, and the majority have below average credit scores, this is largely due to paying business expenses first to stay afloat to the detriment of their personal credit health. ALSO READ: Here are the dangers of loan stacking for SMEs Most businesses are not funding-ready 'Many MSMEs struggle to access finance, not because funding isn't available, but because they are not funding-ready,' reads the report. Being funding-ready is just as important as funding availability. Darlene Menzies, CEO of Finfind, said there have been multiple calls for the 'Funding Readiness Voucher' programme, where business advisors and small business accountants provide funding readiness assistance to MSMEs. 'The idea was born out of the Presidential Jobs Summit catalytic project in 2018 to bolster job creation for youth and help MSMEs access finance.' Low turnover puts businesses in challenging positions The report stated that the annual turnover of small businesses puts them in a challenging position as far as credit regulation is concerned. 'The National Credit Act (NCA) classifies juristic entities with a turnover of less than R1 million per annum as consumers rather than commercial entities, creating a fundamental challenge when it comes to accessing it,' reads the report. Finfind has noticed that new players are revolutionising MSME financing through streamlined, accessible, and faster loan processing. NOW READ: Tips for SMEs: How to secure a financial boost Recommendations for MSMEs The report also gave some recommendations for MSMEs seeking funding. One of the most important recommendations is for these businesses to maintain proper financial records, establish a formal business bank account and utilise a basic accounting solution. Owners need to present a viable and well-managed operation with transparent fund utilisation and repayment plans. 'Business owners need to explore both traditional banks and alternative fintech options based on specific needs and profile.' Recommendations for funders The report stated that funders need to examine how they assess risk and develop products to meet real demand by utilising the tools, technologies, and data now available. 'It requires commitment to change.' It is also recommended that there be collaboration between traditional banks and fintech companies to leverage respective strengths. Funders need to introduce specialised micro-financing options with appropriately scaled requirements for businesses with a turnover below R1 million per annum. NOW READ: Challenges and opportunities for SMEs in 2025
IOL News
7 days ago
- Business
- IOL News
African Bank reports 15% profit growth, paving the way for a bold future
African Bank, which has future plans to list on the JSE, reported a 15% surge in group net profit after tax, reaching R202 million for the six months ended March 31, 2025, driven by its ambitious Excelerate strategy as it aims for a JSE listing ahead "The results reflect the growing impact of its Excelerate strategy, as the Group continues its transformation into a diversified, fully-fledged banking institution serving both personal and business customers," African Bank said. The robust results came despite the South African economy remaining under pressure due to persistent unemployment, structural inefficiencies, and an increasing burden on welfare spending by the government. "However, the easing of inflationary pressure, further aided by the South African Reserve Bank's decision to cut and pause further interest rate reductions, has presented a bit of cautious optimism in the market," African Bank said. CEO Kennedy Bungane hailed the results as a testament to the bank's strategic pivot. 'These figures are more than a financial milestone; they reflect our commitment to empowering South Africans, from township entrepreneurs to families investing in sustainable solutions like solar power,' he said. Celebrating its 50th anniversary, African Bank is positioning itself as a cornerstone of inclusive finance, with a 6% increase in its customer base to 6.1 million and a 20% rise in net advances to R39.1 billion. The bank's Business and Commercial lending arm saw a striking 49% growth in advances, bolstered by strategic acquisitions, including Sasfin's capital equipment finance business, following last year's purchase of its commercial property finance division. These moves have strengthened African Bank's foothold in the small and medium enterprise (SMME) sector, a critical driver of South Africa's economy. Financially, the bank maintained a robust funding base of R36.3 billion, up 8%, with customer deposits accounting for 91% of the total. A strong capital adequacy ratio of 28% - well above regulatory requirements - underscores its stability. Non-interest income soared 39% to R909 million, fueled by growing adoption of digital offerings like the MyWORLD transactional account and credit card services. Improved risk management and a shift to secured lending reduced credit impairment charges by 10%, lowering the credit loss ratio to 5.3%. Chief Financial Officer Anbann Chetti said the results validate the group's strategy and operational focus, 'Our Excelerate strategy is reshaping African Bank into a scalable, future-ready institution. We're delivering value not just for shareholders but for employees and communities.' As part of its pre-initial public (IPO) offering roadmap, African Bank launched iKamva Lethu, an employee share ownership scheme allocating 10% of its shares to staff. "Work is also well underway on the next phase of our pre -IPO journey, which includes the finalisation of amanagement share scheme, and the creation o fretail BEE (Black Economic Empowerment) scheme, following the decision of theGovernment Employees Pension Fund to be a long term shareholder beyond the IPO of the bank. These efforts will culminate in our eventual listing targeted for post the release of our FY27 results, market conditions permitting," Bungane said. Looking ahead, African Bank plans to expand secured lending, launch a digital SMME lending platform, and invest in digital infrastructure, compliance, and cybersecurity. Bungane said, 'This journey is about building a bank that belongs to South Africans, one that serves with integrity and purpose. As we prepare for a future listing, we remain guided by our founders' bold vision and the needs of the communities we serve.' BUSINESS REPORT
Zawya
27-05-2025
- Business
- Zawya
African Bank's acquisition strategy strengthens business and commercial offerings
African Bank Holdings Limited (ABHL) has reported robust interim results for the six months ending 31 March 2025, with Group net profit after tax climbing 15% year-on-year to R202m. These results underscore the momentum of its Excelerate strategy, as the Group accelerates its evolution into a diversified, full-service bank catering to both personal and business clients. Chief executive officer Kennedy Bungane said the Group's performance affirms the strategic choices made in recent years and underscores a return to African Bank's original mission of financial inclusion. 'These results are more than a financial milestone, they mark a reaffirmation of purpose,' said Bungane. 'They show that our customer-first, innovation-led approach is reaching South Africans where it matters most. Whether it's a township entrepreneur accessing capital or a family investing in solar power, African Bank is delivering impact.' Net advances grew 20% to R39.1bn, with a strong 49% surge in Business and Commercial advances. The Bank also reported a solid 6% increase in its customer base to 6.1 million, driven by growth in both its Personal Banking and Alliance Banking platforms. 'Our shift toward a broader product mix, particularly into secured lending, is building resilience into our business while unlocking new revenue streams,' added Bungane. 'As we celebrate 50 years since our founding, we are actively shaping a future where more South Africans have access to the capital, tools and services they need to thrive.' Diversification drives growth African Bank's diversification drive includes the successful acquisition of Sasfin's capital equipment finance business, which follows last year's acquisition of its commercial property finance division. These additions strengthen the Bank's Business and Commercial proposition and expand its footprint in the SMME sector. The Group continues to maintain a healthy funding base, which grew by 8% to R36.3bn. Customer deposits remain the primary source of funding, comprising 91% of the total. The Group's total capital adequacy ratio stands at 28%, well above regulatory minimums. Non-interest income grew by 39% to R909m, driven by increased uptake of the Bank's digital offerings, including the MyWorld transactional account and credit-card services – demonstrating increasing trust in the Bank and its services. Credit impairment charges declined by 10%, bringing the credit loss ratio down to 5.3%, thanks to strengthened risk management and a shift towards secured lending. Chief financial officer Anbann Chetti said the results validate the Group's strategy and operational focus: 'Our Excelerate strategy is not only delivering earnings growth but also reshaping the fundamentals of our business. We are building a scalable, diversified, and future-ready financial institution that is creating real value for shareholders, employees and society.' As part of its Pre-IPO roadmap, African Bank launched its employee share ownership scheme, iKamva Lethu, allocating 10% of the bank's shares to staff. Additional broad-based empowerment initiatives, including a retail BEE offering and a management scheme, are under development. Looking ahead, African Bank will expand its secured lending offerings, launch a digital SMME lending platform, and invest further in digital infrastructure, compliance, and cybersecurity. Bungane concluded: 'This journey is about building a bank that belongs to South Africans, one that serves with integrity and purpose. As we prepare for a future listing, we remain guided by our founders' bold vision and the needs of the communities we serve.'
eNCA
28-04-2025
- Business
- eNCA
African bank fined for misleading advertising
JOHANNESBURG - The Financial Sector Conduct Authority has imposed a 700-thousand rand penalty on African Bank for misleading advertising. This advert was part of the bank's # KeFestive social media campaign in December 2023. READ | African Development Bank chief warns of tariff 'shock wave' It was found to contain factually incorrect and misleading statements on the use of personal loans. Sindiswa Makhubalo, the head of Banks and Payment Providers at the FSCA spoke to eNCA.
Zawya
25-04-2025
- Business
- Zawya
South Africa: FSCA penalises African Bank for misleading 'investment' advertisement
The Financial Sector Conduct Authority (FSCA) has imposed an administrative penalty of R700,000 on African Bank for an advertising campaign that presented a credit product as an investment offering. Investigation The penalty followed an investigation by the FSCA into African Bank's #KeFestive social media campaign, which was found to contain factually incorrect and misleading statements. As part of its ongoing supervisory activities, the FSCA identified and assessed a social media advertisement flighted by African Bank in December 2023. The advertisement, which featured a well-known public figure, encouraged consumers to take out personal loans with the phrase 'It's not a skoloto chomi! Ke investment". It said in a statement: "The FSCA found the above statement to be factually incorrect and misleading as it misrepresented the nature of the loan product that was on offer, implying that it was an investment rather than a credit facility." The FSCA said African Bank contravened sections 6(1), 6(3)(a) and 6(3)(b) of the Conduct Standard, which require the following: - Section 6(1): A bank must ensure that its financial products and financial services are advertised to financial customers in a way that is clear, fair, and not misleading. - Section 6(3)(a): Advertising by the bank must be factually correct; and (b) not contain any statement, promise, or forecast which is fraudulent, untrue, or misleading. Further to the above, the FSCA also found deficiencies in African Bank's governance and oversight processes relating to the review and approval of the aforementioned advertisement. This was a contravention of section 6(9) of the Conduct Standard, which requires the following: - Section 6(9): A bank must have in place processes and procedures for the approval of advertisements and advertising methods by a person of appropriate seniority and expertise within the bank, which must form part of [its] governance arrangements. Fully cooperative The FSCA said African Bank fully cooperated during the investigation of this matter and took immediate action to remedy the concerns raised. "Taking into account the nature of the contravention, as well as the remedial steps implemented by African Bank, R200,000 of the R700,000 administrative penalty imposed on the bank has been suspended for two years, subject to African Bank remaining fully compliant with the Conduct Standard during the suspension period. The FSCA confirms that African Bank has paid the immediately due amount of R500,000. All financial institutions are urged to take note of this sanction and are reminded about the importance of providing clear and accurate information to financial customers regarding the nature of products and services being offered. For many financial customers, decisions about which financial products to purchase are significantly influenced by information conveyed in advertising and marketing material." According to the FSCA, financial customers who rely on misleading advertisements or false impressions are more likely to choose unsuitable products, potentially leading to financial losses or other adverse outcomes. In this case, by presenting a credit product as an investment, African Bank misled customers about key aspects of the offering, including the long-term risks and potential costs associated with taking up the product. The FSCA said financial institutions must have robust internal governance and approval processes to ensure compliance with all requirements of the Conduct Standard, including in respect of the development and publication of marketing material and other key information disclosed to customers. "The administrative penalty imposed in this case serves as a reminder that misleading advertising will not be tolerated, particularly as financial customers increasingly find themselves under pressure to make important decisions regarding their future financial resilience and well-being. Fair customer treatment is integral to maintaining public trust and confidence in the integrity of the financial system," it concluded. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
