Commerzbank EM Credit Profile - African Bank Limited
August 13, 2012
African Bank (ABL) is the largest uncollateralised lending player in South Africa with a balance sheet of nearly $7bn (bank only, as of 31 March 2012). The bank has an investment grade rating (Baa2 from Moody’s) and went through the past crises without a significant credit deterioration. Moody’s sees a decent probability of systemic support for ABL due to its focus on providing financial flexibility to the low income part of the employed population. The bank is profitable and very well capitalised which gives it a strong buffer in the case of a deterioration in assets. It maintains a classic consumer lending model funded mainly by wholesale borrowings; however, it manages to maintain a comfortable balance sheet maturity profile covering its short to medium-term lending by longer-term borrowings. It also plans to expand towards electronic retail deposit taking to diversify the funding base. As typical for retail banks its substantial profit margin reflects its quite high risk appetite and the bank manages problem loans via its own collection facility which allows it to achieve significant recoveries.
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Company — African Bank
Full nameAfrican Bank Limited
Registration countrySouth Africa