Interim Report

Commentary on the unaudited results for the period ended 30 June 2021

Group position
12-month performance

During the 12-month period ending 30 June 2021, the banking industry was significantly impacted by the COVID-19 pandemic, mainly due to reduced profit rates, lower demand for financing activities and increases in credit provisions built up to 31 December 2020, with a release in provisions in the current year. The volatile nature of the economic environment led to an increase in liquidity in the form of deposits from customers, mainly due to customers adopting a cautious approach to new investments in the market.

The encouraging growth in the deposit book, coupled with the reduced demand in our advances business, resulted in excess funds being available for investment in equity finance and mudaraba deposits. Equity finance and mudaraba deposits have, therefore, seen significant growth of R769,03 million or 39,6% during the 12-month period ending 30 June 2021. Intangible assets, which consist mainly of the new core banking system, increased by R11,3 million or 17,6% primarily due to investment in the Albaraka Mobile App. Deferred tax liability increased by R6,3 million or 107,5%, due to movements in temporary differences relating mainly to fixed assets. Accounts payable decreased by R33,0 million or 51,9%, owing to a reduction in supplier payable accounts, as well as inter-bank transactional banking clearing accounts.

Six-month performance
For the six months ended 30 June 2021, the advances book increased by R74,36 million or 1,5% to the end of June 2021, whilst the deposit book remained flat for the same period. The marginal improvement in advances is due to a slow recovery in economic activity. This also resulted in customers having the ability to meet repayments on scheduled COVID-19 repayment plans which resulted in a release in credit provisions for the current period.

Group performance
Due to the reduced profit rates, income from advances and equity finance and mudaraba deposits decreased by R60,83 million or 20,3% compared against the same period last year. There has been an improvement in credit impairments in the current year, due to changes in the economic climate surrounding the COVID-19 pandemic recovery. Credit impairments decreased by R18,7 million or 219,8% compared against the same period in 2020. Last year there was a credit provision increase of R8,5 million and this year a release of R10,2 million, hence the R18,7 million difference year-on-year.

After taking this into consideration, along with sharing with depositors, the net income from funding income activities decreased by R21,3 million or 14,4% year-on-year. In addition, the bank’s non-funding income has increased by R2,54 million or 14,8% primarily due to an increase in transaction fees. A lack of travel activity affecting our foreign exchange business still remains a challenge. Initiatives implemented to reduce costs have proven successful, with operating expenditure decreasing by R16,3 million or 12,3% year-on-year, driven mainly by lower employment costs. Management is placing significant effort on identifying solutions to further reduce costs to mitigate against the reduced income. After consideration of the above, the net effect is a decrease of R2,1 million or 8,7% in total comprehensive income in 2021 compared against the same period in 2020. This has resulted in basic and diluted earnings per share decreasing by 7,4% for the same period.

Management is confident that the bank will continue to be profitable in the 2021 financial year. However, this will be largely in line with the results achieved in the 2020 financial year.


It is apparent that COVID-19 has negatively impacted the bank’s year-on-year results, as is the case in many other industries. Given the slight economic recovery seen in the country during the six-month period ending 30 June 2021, management was optimistic that performance may have improved over the next six months to the end of the year. However, due to the recent civil unrest that unfolded in KwaZulu-Natal and Gauteng, this may hamper the recovery based on its impact to some of our customers. The effect of the unrest is still being assessed and this may affect our provision releases for the remainder of the year.

Additional disclosure requirements in terms of regulation 43 of the Bank’s Act may be accessed via the bank’s website, being: , when published in line with regulations.

For and on behalf of the Board
31 July 2021

Click here for the Capital Adequacy Report as at 30 September 2021

Click here Main Features Of Capital Instruments as at 31 December 2020

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Interim Report 30 June 2021

Click here for the Bi-annual disclosures in terms of Banks’ Act,Regulation 43

Click here for the Liquidity Coverage Ratio as at 30 September 2021

Click here for the Liquidity Coverage Archive Reports

Page last updated: 2022-01-19