End of an era for African Bank

African Bank’s era of expansion through acquisition has come to an end, with the lender now looking to preserve capital. 

The bank, which has a history of financial trouble, has had a turbulent start to 2026 with executive departures and a run-in with local regulators. 

Long-time CEO Kennedy Bungane abruptly resigned on 6 March, with reports soon following that it was due to a regulatory reporting mistake.

African Bank had made errors in its Bankers’ Acceptance returns, with the Prudential Authority (PA) questioning the bank’s regulatory data and reporting. 

The returns are reported monthly, regulatory, financial, and risk reports submitted by all commercial banks to the PA. 

South Africa’s banking regulator alerted African Bank to the errors in January, with it resubmitting the reports with the help of an external audit firm. 

The effect of this turmoil can be seen in African Bank’s financial results for the six-month period ended 31 March, released on the JSE on 21 June. 

African Bank has fundamentally shifted its strategy, ending its era of expansion through acquisition to focus on integrating the businesses it bought over the past four years and rebuilding its balance sheet. 

The bank has been trying to diversify its operations and reduce its reliance on unsecured lending. 

This began in 2022, when it snapped up Grindrod Bank and Ubank. These acquisitions were followed up by the purchase of two divisions from Sasfin Bank in 2024 and 2025. 

The acquisitions grew African Bank’s business banking business, giving it exposure to vehicle and asset finance, as well as a higher-quality retail client base. 

“However, the investment required, as well as the time needed to complete the integration, the build-out of new systems, and an organisational redesign, have weighed on our results,” African Bank’s board said. 

It said that the bank remains committed to embedding these new capabilities and unlocking sustainable value. 

“This next phase has necessitated changes in management to ensure African Bank delivers on its strategy,” the board said. 

“We are now at an inflection point where the foundations we have cemented position us to consolidate the business, return to the basics of running a bank for the people, and deliver to them well.” 

The first step in implementing the change in strategy was giving up on its attempt to buy Eskom’s staff home loan book. 

African Bank had previously announced that it would acquire Eskom’s staff home loan book, which is valued at around R5.7 billion. 

In a statement on 8 May, the bank said that it will now focus on its existing operations and solidifying its diversified product offering. 

African Bank’s financials

The bank’s board explained that the poor financial performance in the first half of its 2026 financial year was due to the costs of transitioning towards a diversified lender. 

“As we transitioned, we have had to absorb the short-term pressures associated with investment, integration, and capability-building, which are reflected in these interim results,” the board said. 

These pressures culminated in the bank’s net income before impairments falling by over R500 million to R3.27 billion. 

This plunge of 13.4% was coupled with a rise in impairments to R1.78 billion and a credit loss ratio of 7.7%. 

​​African Bank posted a net after-tax loss of R936 million compared to a loss of R279 million in the same period in 2025. 

The bank attributed the decline in net income to a 39% fall in non-interest income as fair-value gains and unclaimed balances did not recur in the six months to end March. 

Interest income remained in line with the previous year, and the bank’s insurance business showed strong net income growth of 11%. 

African Bank’s cost-to-income ratio, which is a vital indicator of efficiency for a bank, rose to 70% in the first half of its 2026 financial year. 

In contrast, South Africa’s biggest banks have a cost-to-income ratio of close to 50%. 

This poor financial performance has pushed African Bank to refocus on preserving capital and stem its slide. 

“The expected earnings uplift from the acquisitions has taken longer to realise than initially anticipated, as evidenced in the performance for the current period,” the board said. 

“In response, we have deliberately shifted our focus towards operational consolidation. This includes integrating operations, aligning systems, and embedding a unified operating model

across the Group.” 

“This next phase is focused on streamlining processes, eliminating duplication, strengthening governance across the newly acquired entities, and driving greater operational efficiency.”