African Bank’s transformation comes at a cost

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JIMMY MOYAHA: Shortly after the market opened this morning, at about 09:20, African Bank Limited released interim results for the six months ended 31st March 2026.

At the start of their new financial year credit loss ratios were up slightly, credit impairments were up, and total income before expenses was down around the R1.5 billion mark.

We’re going to be taking a look at these numbers in a bit more detail with the company’s interim chief executive officer. Zweli Manyathi joins me on the line now to see what we make of their performance. Mr Manyathi, lovely having you on the show. Thanks so much for taking the time.

I suppose congratulations are in order – the sudden change of leadership at African Bank. We haven’t had the privilege of catching up since then. That aside, how are you and the team feeling about the set of interim results for the new financial year?

ZWELI MANYATHI: Thank you very much. Thank you for having us. We have taken the results to heart. They are reflective of a very challenging trading environment, especially for the customer segment that we actually serve.

So we really have taken a bit of time to reflect on whether or not our operations, the way we’ve been running them, are fit for purpose.

We’ve done quite a bit of work to rethink exactly, and first understand what are the areas of concern and underperformance. And the second piece is what credible plan we can put in place to actually self-correct.

So they were very disappointing, but we haven’t given up. We have a fairly good sense of what needs to be done for us to get back to health over a period of time. It’s obviously not going to take six months to do that, but that’s where we are.

JIMMY MOYAHA: I suppose being in the banking space and being a business like African Bank, the bank might not necessarily even have the luxury of thinking about giving up.

Zweli, I want to take a look at some of the changes within the business, some corporate announcements, appointments, shifts happening – obviously yours is one of the adjustments from a management perspective, the other being the appointment of the CEO for the Personal Banking side of the business.

Take me through some of the movements that have been happening at a management level and how the business is repositioning itself strategically because of them.

ZWELI MANYATHI: The context in which all of the changes are taking place is a proper business review, which we’ve done.

And as part of that business review, of course we questioned where the bank was operating from a segment perspective, both on personal banking and business and the appropriateness and completeness of our proposition.

We’ve done that, and we have some tweaks that we are already implementing.

The next phase for us was, if this is a business model executing on these objectives, what does the operating model look like?

We’ve done work and there is no doubt that we need to be a lot leaner than we are insofar as the number of roles that we have.

We need to just rethink without losing the essence of effectiveness in people delivering to the objective. We can do much better by clustering some of these. That will come out into a much leaner structure that we will be implementing, and absolutely reduce the number of things that the bank does.

We are doing, as we speak now, about 43 things. I’m saying that is way too much, that’s way too much. Reduce that to 10 meaningful things that we’re going to do because it creates clarity for the organisation.

So I’m very comfortable that we are very clear about what we’re going to do against each of these things.

Remember, one big driver was a shrinking balance sheet from an asset perspective. That was deliberate.

We sold some of the unbalanced book and that shrinks the book and as a consequence of that somewhat, you get a bit of a hit insofar as net interest income is concerned.

But that’s not a bet here because you get rid of [inaudible] that you don’t believe is good quality. That’s the first thing.

The second thing that we did was to pull back on risk appetite. When we pull back on risk appetite, it might sound knee-jerk but our objective was make sure that the business that we write is profitable in a short space of time.

So we pulled back on risk appetite, which means our origination has collapsed from as much as R850 million a month on the consumer side, personal banking side, to about R250 million.

So we dropped R500 million.

And our moat of that book is standing at R750 million. So we are going to be down half a billion per month, unless we actually regenerate demand and get to good quality customers. So that is fine. That is fine. You don’t fix that overnight.

The cost that I was talking about as one of the biggest issues for me is something that is in our gift to address a lot of it.

So we’ve actually [set] our own targets that we must achieve over a period of three years, and we know exactly what it is that must be done to achieve that.

On the cost side I’m comfortable that we know what we’re going to do.

And the last piece I want to talk about is when you talk about non-interest income, that’s a very critical lever in the bank because it’s income that is capital light. We haven’t actually grown that substantially in the past. We are going to focus on that.

So I’m very confident that with the team that I have we have what it takes to address the challenges facing the bank today.

Insofar as teams are concerned, you have to have the right team to execute. Yes, Happy Ralinala is the CEO of Personal Banking. We have successfully interviewed a few people – one CEO for Business and Commercial. We have interviewed the CEO who is going to be running our Insurance part of the business. We have spoken successfully to somebody who’s going to do Human Capital.

All of those have been submitted to the Prudential Authority. We await its decision and we hope to get those very soon.

JIMMY MOYAHA: Zweli, before I let you go, I had a conversation with your predecessor around the intention of African Bank to relist on the Johannesburg Stock Exchange. Initially that was set aside for around 2027.

Given the consolidation the business is now undergoing and the strategic shift that you’ve just alluded to, does this derail those listing plans or are we still on track there?

ZWELI MANYATHI: No, it does differ. It does differ because, just think about it –

When you go to list you need to have had a few financial years of delivering solid results, and 2026 is not going to be one of those.

So that naturally pushes up the time.

So once we have actually engaged fully as the executive and the board, we will actually communicate to stakeholders what the new date looks like. But there must be definite confidence of our ability to deliver three years successfully, and then we can go to a listing.

It doesn’t mean the IPO is going to be delayed though, because, remember, the pre-IPO is actually meant to make sure that by the time we go to listing we don’t have an overhang of a much bigger, if you like, pool of shares available for trade. We wanted to make sure that the pool is appropriate.

So we still have to do the management scheme. We still have to do the retail scheme. All of the schemes that we want to do before we go to listing, we’ll push for those, but the listing itself is going to be pushed out for a period.

JIMMY MOYAHA: A business undergoing some restructuring and potentially some strategic shifts to better align it with its objectives and vision going forward.

All the best to you and the team, Mr Manyathi. Welcome to the unrelenting world of leading a commercial bank in South Africa. We’ll look forward to seeing how the rest of the year shapes up for you and the team.

Zweli Manyathi, chief executive officer at African Bank, joined us to look at their interim results for their first six months.