African Bank Investments Ltd., South Africa’s largest provider of unsecured loans, said the value of loans given out in the first quarter fell 25 percent as the lender tightened its criteria for giving credit.
Disbursements totaled 5.56 billion rand ($501 million) for the three months through December compared with 7.43 billion rand a year earlier, the Johannesburg-based bank said in a statement today. The bank’s furniture unit sales dropped 21 percent to 1.18 billion rand over the period, it said.
African Bank’s share price fell by half last year as bad debts rose and it slipped into losses after writing down its furniture retail unit, Ellerine Holdings. The lender said on Jan. 30 it’s in partnership talks with a retailer for Ellerines as part of a three-year turnaround plan that also involves using capital from last year’s 5.5 billion-rand rights issue, strengthening collections and improving products.
There is “likely to be a significant reduction in profitability for the first half,” the lender said. “Our strategic actions undertaken in 2013, and the improvement in the quality of new business written, are expected to produce improved results in the second half of fiscal 2014,” Leon Kirkinis, head of the bank, said in the statement today.
African Bank dropped 4.8 percent to 10.59 rand as of 11:40 a.m. in Johannesburg.