Zweli Manyathi, interim group CEO of African Bank. He said a operational consolidation strategy will restore earnings growth at the bank.
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African Bank, which has seen its profits decline every year since 2022, has blamed a R624 million loss for the six months to March 2026 on the impact of transformation costs, integration activities, higher impairments, and a challenging operating environment.
Explaining the loss on Thursday, interim group CEO Zweli Manyathi said the bank has just exited their “Accelerate 2025 strategy,” wherein it transitioned into a diversified retail and commercial banking platform, through several acquisitions, including Ubank, Grindrod Bank, and Sasfin’s Capital Equipment Finance (CEF) and Commercial Property Finance (CPF) businesses, and growth initiatives such as launching a business banking division.
In an interview with Business Report, Manyathi said they plan to arrest the interim loss, and despite the earnings pressure, the balance sheet remains solid, with a 25.8% capital adequacy ratio well above the minimum regulatory requirements, while liquidity reserves increased sharply to R6.6 billion from R3.7bn.
This was supported by a R700m issue in the debt capital markets.
He said while the acquisitions expanded their customer reach, strengthened the funding base, and added secured lending capabilities, they also came with their own technology that needed to be integrated, and staff that were not allowed to be retrenched in terms of the acquisition terms, which had resulted in some cases in duplicated roles and a top heavy management structure.
“The next phase of African Bank’s journey will see it shift from expansion to operational consolidation as it focuses on integrating capabilities and unlocking value from its diversified offering. There won’t be fancy strategies, just a back-to-basics approach to banking,” he said.
For instance, the bank aimed to reduce costs by R1.2bn by 2028, which meant reporting negative growth in costs over the next few years. A broad efficiency program focused on simplifying operations, improving productivity, and extracting integration benefits from the enlarged platform has been launched.
In the interim period, operating expenses were broadly unchanged at R2.3bn. Cost management initiatives contributed to reductions in several discretionary spending categories; but the lower revenue caused the cost-to-income ratio to rise to 70% from 62%.
Total net income from operations before impairments and costs came to R3.27bn, lower than R3.78bn previously. Interest income on advances of R3.7bn was driven by growth in the Business & Commercial advanced book.
Non-interest income contracted by 39% to R550m due mainly to a fair-value loss of R46m compared to a R65m profit in the comparable period and lower commissions earned on value-add products such as airtime prepaid vouchers, data, and utilities.
Although Personal Banking had higher transactional fees from increased customer activity and usage from strategic partnerships, higher surplus funds from term deposits not deployed to future projects were held at a higher cost.
Net insurance income increased by 11% to R342m, supported by lower claims and enhanced credit and insurance risk management practices.
Credit impairment charges increased to R1.8bn from R1.2bn, reflecting pressure from the current credit environment. The group continued to apply disciplined credit risk management, supported by portfolio optimisation strategies and proactive rehabilitation and recovery initiatives, said Manyathi.
These efforts were strengthened by investments in data and model enhancements, credit systems, and increased capacity across both the first and second lines of defence.
“We are entering a phase where implementation and delivery will be paramount to scale our business, preserve our capital, drive higher transactional activity, and continue prudently managing our costs. We will remain agile and responsive to changes in the external environment, ensuring that we can navigate uncertainty,” said Manyathi.
He said the 2026 period is expected to remain challenging as the bank effects changes and delivers on the consolidation plan that will create a sound platform for the future,
Meanwhile, the group has prioritised the filling of key leadership vacancies as it implements its strategic consolidation phase. Happy Ralinala, with extensive experience in banking and entrepreneurship development, has been appointed as Group CEO for Personal Banking, following regulatory approval.
Ralinala pointed out that Personal Banking sits at the heart of helping customers achieve theirfinancial goals and improving access to meaningful financial solutions.
"I look forward to working with colleagues across the Group to continue building a bank that serves customers with care, supports broader economic participation and contributes to growth," she said.
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