One South African bank following in Capitec’s footsteps

African Bank is working to become a fully integrated financial services giant, with plans to offer home loans, digital lending, and complete transactional banking services.

African Bank has been making significant strides towards this goal since being saved by the South African Reserve Bank over a decade ago.

In 2014, the central bank took a 50% stake in African Bank after it collapsed under a mountain of bad debt and could not raise new funding.

The Reserve Bank convinced the bank’s peers, including Standard Bank, Absa and the Public Investment Corporation, to acquire stakes.

Since then, African Bank has made significant progress toward regaining market share and improving its ability to compete in South Africa’s challenging and highly competitive financial services market.

The bank recently released its results for the first half of its 2025 financial year, which showed a strong performance.

African Bank reported a total comprehensive profit of R202 million for the period, up from R176 million in H1 2024.

In addition, the bank’s credit impairments declined from R1.36 billion to R1.22 billion in the six-month period. Its expected credit losses improved slightly from R10.15 billion to R9.97 billion.

The bank’s balance sheet was also strong in this period, with assets up around 7.6% and net advances growing by 19.6% to R39.15 billion.

In an interview with Daily Investor, African Bank CFO Andann Chetti said these strong results are mainly due to the company’s diversification strategy.

Like Capitec, African Bank is looking to diversify its income and reduce its reliance on interest income, like other banks that were initially built on unsecured lending.

This strategy has paid off well for African Bank so far. In its H1 2025 results, the bank reported a total income before investment in insurance of R3.47 billion, up around 5% from the prior year.

This total consisted mainly of R2.56 billion in net interest income, which declined slightly compared to the prior year’s R2.65 billion. 

However, non-interest income contributed R844 million to total income, a significant increase from R604 million in H1 2024.

African Bank’s net insurance result for this period was R308 million, up around 7.7% from the prior period’s R286 million.

Therefore, the company’s diversification strategy is bearing fruit, with African Bank looking to build on this momentum in the coming years.

JSE listing loading

African Bank’s diversification plans will intensify in the coming years, as the company is looking to launch several new offerings.

Chetti said this will enable the bank to become a more fully integrated financial services institution and make African Bank’s future IPO more attractive to investors.

Initially, African Bank was set to list on the JSE in 2025. However, after some consideration, it decided to delay its listing to 2027 or 2028.

“We want to make sure that when we ultimately list, we list very successfully,” CEO Kennedy Bungane explained at the time.

“We think, at this time, that the listing will come at the back of full-year 2027 financial results.”

Chetti told Daily Investor that engagements with analysts and other stakeholders convinced the bank to delay its listing, giving it more time to create a more compelling listing proposition.

He said the company’s diversification strategy is key to this plan, as it will allow the bank to list as a nearly fully integrated financial services company.

This diversification strategy will see African Bank launch several new products over the next few years.

For example, Chetti said the bank has already piloted a home loan product among its staff and plans to launch this product to the market.

The bank is also looking to offer a full suite of digital transaction banking services, allowing customers to transact, save, invest, and apply for loans through the African Bank app.

The bank has also made significant strides in its Business & Commercial division over the past year, and this trend is set to continue following its acquisition of Sasfin’s Capital Equipment Finance and Commercial Property Finance businesses.

African Bank successfully completed this acquisition and the transfer of these businesses in November 2024.

The bank said the acquisition of these two business units has further bolstered its Business & Commercial division and its ability to support entrepreneurs, with its product suite now including leasing, rental finance, and instalment sales agreements.

While all of these plans are in the works, Chetti said the bank’s strategy will continue to align with customers’ needs.

“We’re certainly building a fully-fledged bank. For us, the end goal is to have all the relevant product suites that our customers want,” he said.