African Bank's acquisition of Ubank now official

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Kennedy Bungane, the CEO of African Bank.
Kennedy Bungane, the CEO of African Bank.

BUSINESS


African Bank has completed its acquisition of prominent micro-lenders Ubank after it announced that it was the successful bidder to purchase most of Ubank’s disclosed assets and liabilities.

The deal, which was finalised late in November, signifies a milestone in the African Bank’s revival strategy, which is geared toward a diversified business approach.

The bank is tightening its credit risk appetite again, citing that the current economic environment is putting a strain on households' financial health.

The bank has also just opened the lending taps again after adopting a cautious stance during the Covid-19 lockdowns.

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African Bank has not been a publicly held company since it went into curatorship in 2014. When it emerged out of curatorship in 2016, its shares went into the hands of the SA Reserve Bank, which invested R3 billion, along with a consortium of banks that helped back the bank in time of need.

Chief executive officer Kennedy Bungane said the UBank transaction was an essential element to building a scalable and sustainable banking business with a compelling listable proposition.

“Given Ubank’s strong retail deposits, transactional accounts, and partnerships with MTN’s Mobile Money, it will accelerate the diversification and scaling of African Bank in line with our mission to build a customer-centric, digital and data-enabled business,” he said.

He also added that the deal advanced the principle of inclusivity and goes a long way towards meeting their founding philosophy of being the bank of the people.

He said:

Ubank’s customers will be migrated to African Bank’s MyWorld product, which offers a higher degree of personalisation, lower fees and more competitive value.

African Bank reported a 38% increase in net profit after tax to R736 million. The bank further grew its loan book to R33.6 billion in the financial year that ended on September 30, boosted by an 87% increase in new retail advances and the expansion to business banking, which has seen it build a R1.76 billion corporate loans book.

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“African Bank has also received approval from the finance ministry for its acquisition of 100% Grindrod Bank in a deal worth R1.5 billion, giving African Bank an existing corporate and small medium-sized enterprises client base," he said.

African Bank's risk and capital management committee meets quarterly to review the bank's appetite towards risk. The bank's cautious stance comes after the old African Bank came close to collapsing under the management of former CEO Leon Kirkinis.


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