The bank, now under curatorship, said in a statement earnings were negatively impacted by a declining advances book, due to lower monthly disbursements and the paydown of loans.
The early paydown of loans by customers decreased income from operations by 20% to R6.2bn, compared to the prior reported income of a restated R7.7bn.
Although the credit impairment charge improved compared to March 31 2014 it remains high, principally due to the deterioration in the advances book that existed at curatorship date, African Bank said.
The reported bad debt charge of R5.4bn decreased by 37% compared to the restated R8.5bn charge reported for March 2014.
Operating costs rose by 4% to R1.38bn from the prior period of R1.32bn, primarily due to the increased costs of curatorship including restructuring and legal and advisory costs, offset to some extent by a lower cost base through natural attrition of staff and specific cost control measures implemented by management.
Interest expense decreased by 5% to R2.28bn from the prior period of R2.4bn, due to slightly lower average liability balances compared to the comparative period.
The bank said curator Tom Winterboer remains of the view “that losses will persist for the foreseeable future and accordingly has not raised a deferred tax credit in the income statement and deferred tax asset on the balance sheet in respect of the six months ended 31 March 2015”.
“While these results are disappointing, they are in line with our expectations. The restoration to profitability and subsequent achievement of acceptable investor returns in the ‘Good Bank’ will take time, effort and commitment,” Winterboer said.