African Bank Warns Profit Drop May Increase Funding CostRenee Bonorchis
African Bank Investments Ltd., the largest provider of unsecured loans in South Africa, is still considering the dollar bond issue it delayed earlier this year, said Executive Director Tami Sokutu.
“There is still an appetite within the country,” Sokutu said in an interview at the World Economic Forum on Africa in Cape Town today. “We have no reason to change our strategy.”
African Bank shelved the bond sale in February after the National Credit Regulator requested that a tribunal impose a fine after finding that loan agents at one of the lender’s branches colluded with customers to lower lending standards in exchange for cash. The bank won’t sell a dollar bond “at all costs,” Sokutu said today.
African Bank plans to visit international investors after the Johannesburg-based lender announced last week that earnings per share in the six months through March dropped by as much as 28 percent. That sent the stock tumbling to its worst three-day decline in 13 years.
African Bank rose as much as 12 percent, the biggest intraday gain in four years, in Johannesburg trading and was up
7.7 percent to 23 rand as of 5:05 p.m.
“Last week’s announcement and the perceptions around unsecured lending could raise the cost of funding,” said Sokutu. The lender said the South African economy and rising consumer prices are affecting customer’s ability to repay loans.