African Bank profit leaps

‘We are really lucky today that we’ve got the balance sheet, the capital, the liquidity, the people, and a plan to become what we were always meant to be – a bank for the people’: CEO Kennedy Bungane.

DUDU RAMELA: African Bank Group today released its financial results for the six months ended March 31, 2022. Net profit after tax increased by 145% to R372 million. The group says it continues to diversify its funding base by targeting retail savings deposits, which grew to R11 billion from R8.6 billion, an increase of 27%. Included in this is R1 billion in deposits from transactional MyWORLD accounts.

Kennedy Bungane is the chief executive officer of African Bank, and he joins us to talk through the group’s performance. Thank you very much, sir, for availing yourself this evening. How would you characterise the results?

KENNEDY BUNGANE: Thank you for having me. Always a pleasure to talk to your audience. These half-year results have really been encouraging news, giving us confidence that indeed our accelerated strategy of building scale, diversity, and sustainability at African Bank is truly on course. We are delighted with all the numbers coming through at this time, and emboldened to continue to transform this bank into a true bank ‘for the people, by the people, serving the people’.

DUDU RAMELA: Let’s take a look at what drove the growth. You experienced healthy growth in the MyWORLD transactional banking offering. Talk us through the numbers there.

KENNEDY BUNGANE: This is a really big story for us. We’ve increased MyWORLD bank accounts by over 76%. We’ve almost doubled the balances that sit in MyWORLD. Maybe just to go into a little bit of detail as to why this is important for us – when we came through last year with this new strategy of radically transforming African Bank from the monoline microlending institution to a fully-fledged retail and business bank, the biggest challenge was how we were going to transition our customers to trust us with their transactional services.

So we spent a lot of time, in line with our sales transformation strategic theme, to work on our teams, upskill them for co-selling and building our winning digital omni MyWORLD channel so that our customers can take it. They have voted on their feet and are helping us diversify our revenue base from just interest income to non-interest income, and to move from just being a lender into a fully-fledged retail bank.

DUDU RAMELA: Kennedy, the bank has highlighted increased income earned on loan disbursements. What does that talk to?

KENNEDY BUNGANE: That talks really to the core of what our bank has always been good at, which is lending. We’ve been very clear on that in order for us to build a customer-centric digital- and data-enabled business that is diversified, that is scalable, that is sustainable, and we cannot lose the core of what we do today. We need to continue to win when it comes to lending.

Now, with the past two years of Covid we had gone quite shy in terms of backing our customers, and we’ve now been lucky that with the improvements in the macroeconomic space we are able to open the taps a bit and back ourselves to support our customers. This is the historic high level of credit sales at African Bank, and I think it speaks of the confidence in the ranks about our direction of travel and how we are really building a new bank here. So we are quite chuffed with the uplift in credit sales, as much as we [are] with the uplift in our transactional banking accounts.

DUDU RAMELA: You speak of being a customer-centric bank. How important is it for the group to build towards a customer-development journey in the 2021 South Africa customer satisfaction index announced in March of this year? You took an overall leadership position in six of the nine measured categories.

KENNEDY BUNGANE: We really need to take this time to thank millions of our customers out there who have voted us the best in all of those six out of nine categories you’ve referred to. This is something we guard jealously at African Bank – to continue to be rated overall number one in customer service. It means we’re doing something right. We want to jealously guard this position because we are a bank with special history, founded in 1964 in Soweto, Orlando High, by black businessmen and women from all over the country who wanted a bank of their own, a bank that feels like their own, that’s got a close affinity to them, that understands them, a bank by and for them.

Skip to almost 50 years later, with all of our highs and lows, when our customers go out and say, yeah, it is African Bank that satisfies us the most, that is confidence-boosting.

It says they’re here with us, they are going to walk the path with us as we transition – not just from being a microlender, but into being a fully-fledged retail and business bank. We know our customers have got us.

DUDU RAMELA: That transition – how important is an integrated digitisation approach as you move forward?

KENNEDY BUNGANE: Well, it’s an integral part of it. This transition is very much about ensuring that we deploy digitisation so that we can move those customer pain points that still remain in our customers’ interaction with us, whether via branch or via call centres, or via smartphones or laptops.

We have invested quite a lot in the last six months. In fact, we’ve had over 145 new African bankers join us, some bringing some very rare and much-needed digital analytics capabilities that enable us to have a prescriptive and descriptive understanding of how our customers experience us, and how we can automate those pain points and ensure that we get our processes correct so that our customers see the difference in how they experience us on a day-to-day basis.

I guess the 76% uplift in the MyWORLD transactional accounts that I’ve spoken about speaks about improvements that are starting to bear fruit in that journey.

DUDU RAMELA: Right. What of the journey that African Bank has embarked upon to build a fully-fledged middle-of-the-pyramid business banking offering? We understand this is in the final stages of development.

KENNEDY BUNGANE: Most certainly. I’m hoping to be able for us to speak about this in the [near] future. We are very clear that the days of a bank founded by businessmen and women which no longer banks them and is only a retail bank are over. We’ve identified that there continues to be an underserved set of entrepreneurs, of businesses that are adjusting that needle of the pyramid in terms of business-banking customers.

Our competitors and large banks in this market are actually damn good in servicing your large corporates, your middle enterprises with turnovers above R500 million. But once you start going down to below R250 million per annum, to your entrepreneurs – a doctor who runs a clinic there, sole proprietors, or emerging businesses – as though the solutions for them are still not quite adequate, we think this is an opportunity for us to fill, and we are working both in terms of putting in rails for a business-banking offering and also [the] digital SME offering that will help address this need in our market today.

DUDU RAMELA: Fair enough. You’ve talked to us about the rich history of the bank, I guess. Looking forward and looking into the future, what does it hold?

KENNEDY BUNGANE: We trust our heritage isn’t just something that is in the past. It is the African Bank story [as to] how, and for whom it was established, [and] is our inspiration for envisioning a future of a bank for the people, by the people, serving the people. It is a story that inspires the kind of six months we are reporting [on] today in terms of performance, because we are reminded that deep in our DNA this is a bank that was always meant to be different in how it looks at communities, how it looks at our people, and how it looks at households and entrepreneurs.

We are putting unique solutions on the table that are meant to differentiate us in how we interact with our customer or with our communities, and then growing with them as we continue. We are really lucky today that we’ve got the balance sheet, the capital, the liquidity, we’ve got the people, and a plan to become what we were always meant to be – a bank for the people.

DUDU RAMELA: Kennedy, congratulations. We look forward to speaking to you again very soon here on the programme. Kennedy Bungane is the CEO of African Bank.

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