African Bank has reported a R624 million ($38 million) loss for the six months ended March 2026, as rising credit impairments, acquisition-related integration costs, and a challenging operating environment weighed on earnings, prompting the lender to accelerate cost-cutting measures and delay its planned public listing.

The interim loss marks a sharp reversal from the R202 million ($12.3 million) profit recorded in the previous financial year and highlights the financial strain of transforming the bank into a diversified retail and commercial lender following a series of acquisitions.

Despite the earnings setback, the bank said its balance sheet remains strong, with a capital adequacy ratio of 25.8%, well above regulatory requirements, and liquidity reserves rising to R6.6 billion from R3.7 billion ($401.83 million) after a R700 million ($42.62 million) debt capital markets issuance.

African Bank’s transformation enters new phase

Interim Group CEO Zweli Manyathi said the bank has completed its “Accelerate 2025” expansion strategy and is now entering a phase focused on consolidation, cost discipline, and extracting value from acquired businesses. “There won’t be fancy strategies, just a back-to-basics approach to banking,” Manyathi said.

In recent years, African Bank expanded through acquisitions including Ubank, Grindrod Bank, and Sasfin’s Capital Equipment Finance and Commercial Property Finance units, while launching a business banking division.

Although these moves broadened its customer base and strengthened funding capabilities, they also introduced duplicated systems, overlapping management structures, and integration challenges that continue to pressure profitability.

Credit losses and weaker income weigh on performance

The bank’s operating performance weakened during the six months, as revenue declined and credit losses increased. Total net income before impairments and operating expenses fell to R3.27 billion ($199.03 million) from R3.78 billion ($230.07 million) a year earlier. Net interest income remained under pressure, with growth in business and commercial banking offset by weakness in the personal banking portfolio.

Non-interest income dropped 39% to R550 million ($33.47 million), driven largely by a R46 million ($2.8 million) fair-value loss compared with a R65 million ($4 million) gain in the prior period, alongside weaker commissions from value-added services such as prepaid airtime, data, and utilities.

Net insurance income rose 11% to R342 million ($20.8 million), supported by lower claims and improved risk management. Credit impairment charges surged to R1.8 billion ($109.54 million) from R1.2 billion ($73.02 million), reflecting a difficult credit environment for consumers and businesses. Management said it has strengthened underwriting standards, improved credit models, and expanded risk management capabilities to stabilize asset quality. Operating expenses remained broadly flat at R2.3 billion ($139.97 million), but weaker revenue pushed the cost-to-income ratio to 70% from 62% a year earlier.

Cost-cutting drive targets R1.2 billion savings

African Bank has now shifted its strategic focus toward improving operational efficiency and profitability. The lender has launched a group-wide productivity and integration program aimed at simplifying operations, eliminating duplication, and extracting synergies from its acquisitions.

As part of this plan, the bank is targeting cost reductions of R1.2 billion ($73.03 million) by 2028, while aiming for negative cost growth over the coming years. Management is also reviewing its branch network and organizational structure, with potential branch consolidation and workforce rationalization forming part of the turnaround strategy.

At the same time, the bank has tightened lending standards, recalibrated its risk appetite, and introduced new underwriting scorecards to reduce defaults and stabilize earnings.

Leadership changes support turnaround

African Bank is strengthening its leadership team as it implements its consolidation strategy.

The lender has appointed Happy Ralinala as Group CEO of Personal Banking following regulatory approval, reinforcing the division’s role in driving customer growth and financial inclusion.

Meanwhile, the bank is seeking regulatory approval to retain Manyathi beyond its executive retirement age of 65. Manyathi, who became interim CEO in March following the departure of Kennedy Bungane, said the board has engaged South Africa’s Prudential Authority to confirm his appointment as permanent Group CEO while reviewing the bank’s retirement policy.

IPO timeline pushed further out

African Bank has again postponed its long-anticipated stock market listing.

The lender had initially targeted a Johannesburg Stock Exchange listing in 2025, later shifting expectations to 2027/28. Management now expects the IPO to take place around 2030/31, contingent on delivering at least three consecutive years of strong financial performance.

Manyathi said restoring profitability remains the immediate priority, although the bank remains committed to eventually listing.

African Bank is currently owned by the South African Reserve Bank, the Government Employees Pension Fund, and a consortium of commercial banks including Standard Bank, Absa, Nedbank, FirstRand, Investec, and Capitec. The lender has been rebuilding since emerging from curatorship following the collapse of African Bank Investments Limited in 2014.