Financial reporting

MILESTONES FOR THE SIX MONTHS ENDED 31 MARCH 2024

• Steady financial performance with a growing customer franchise while trading in a tough economic environment and resulted in subdued balance sheet growth.
• The diversification of our balance sheet is making headway following the integration of last year’s acquisitions, and consisting of:

• Net advances of R32.7 billion (H1 23: R32.4 billion), with subdued growth of 1% in this reporting period, with secured business banking loans making up 37% of our loans to customers and delivering the expected benefits contemplated from the acquisitions,
• A stable funding base that has further diversified with business and retail deposits making up 91% (H1 23: 85%) of total funding of R33.5 billion (H1 23: R33.9 billion),
• Significant liquidity with cash reserves, excluding statutory asset requirements, totalling R7.9 billion (H1 23: R8.5 billion), and
• Strong capital adequacy position, notwithstanding the two acquisitions completed in the prior year, with total capital adequacy ratio of 32.5% (H1 23: 29.4%), well above our regulatory and internal minimums.

• Notwithstanding the tough operating environment which exists in South Africa, the Group reported a commendable net profit after tax for the six months ended 31 March 2024 of R203 million (H1 23: R43 million loss).
• Reviewing the various elements of the Group’s operational performance:

• Interest income declined by 10% to R3.5 billion (H1 23: R3.9 billion), mainly as retail unsecured lending advances reduced and negatively impacting loan disbursements, resulting in a net interest margin of 10.2% (H1 23: 11.7%),
• Cost of funding was well managed at 7.8% (H1 23: 7.4%) notwithstanding that the average repo rate rose 150 basis points over the same period,
• Non-interest income grew by 26% to R839 million (H1 23: R668 million) as usage of the MyWORLD and Credit Card accounts by customers increased, and value-added services offered by the Group through the expanding Alliance Partnership customer base were consumed,
• Insurance profit decreased by 8% to R313 million (H1 23: R340 million), in line with subdued growth in the retail Consumer Banking advances book,
• Operating expenses were well contained with a 3% reduction over the prior period, with a cost to income ratio of 58.3% (H1 23: 58.0%) as the group continues with its investment and integration phase, and
• Credit impairment charge improved by 40% to R1 355 million (H1 23: R2 240 million) resulting in a corresponding reduction in the credit loss ratio to 6.6% (H1 23: 11.1%) due to our enhanced credit granting criteria and improvements to our collections and rehabilitation processes.