Provision for Covid-19 bad debts have plunged the banking operations of African Bank Holdings to a R311 million after-tax loss in the six months to March.
African Bank, which came out of curatorship in 2016, has been on an upward trajectory over the past three years, attracting 258 000 new accounts on its transactional banking product launched a year ago, and over R3.8 billion in customer deposits. Every year its profits have grown, until now.
On Wednesday it said it had set aside a R550 million Covid-19 specific provision.
Before its near-collapse in 2014, the old African Bank led by Leon Kirkinis never provided enough for impairments. This underprovision is what caused the old bank to be placed under curatorship when bad debts started spiralling out of control.
Before taking Covid-19 adjustments into account, the bank recorded a profit of R85 million, slightly higher than the R69 million the bank reported in March 2019.
Even with this impairment charge in place, African Bank said its liquidity remains robust as customer deposits have continued to grow even during the lockdown.
At a group level, which includes insurance operations, African Bank Holdings recorded a R111 million after-tax loss? compared to a R533 million profit in March last year.