Finbond, which targets the unbanked and underserved market of more than 40% of the adult population in South Africa, said it believed the evolution from a microfinance institution to a mutual and savings bank would ensure it achieved results over the medium and long term.
The company said the challenging macroeconomic environment, as well as the adverse market conditions within which Finbond operates, were not expected to abate in the short and medium term.
"However, we remain confident that we have the required resources and depth in management to successfully confront and overcome these various challenges facing Finbond," the company said.
For the six months ended August, Finbond granted R203.1m worth of loans and received cash payments of R281.9m from customers.
Finbond’s net impairment as a percentage of expected instalments amounted to 5.3% from 5.1%, and net impairment as a percentage of cash received (which is more conservative than instalments due) stood at 5.8% from 5.3%.
Headline earnings per share increased 257% to 2.0c from a 1.3c loss, compared with the same period last year.
Total income, which includes interest income, fee income and microfinance income, rose to R103m from R87m, while profit came in at R9m from a R4.7m loss.
Finbond said the six-month period ended August had been pivotal for it in terms of its evolving strategy to establish and register a mutual and savings bank in order to provide clients with a full range of low-cost banking services.
The company said for the six months ended August review, mortgage origination contributed less than 1% to Finbond’s revenue.
All of Finbond’s mortgage origination activities have been outsourced, and Finbond now mainly focuses on its microfinance and mutual bank business.
Effective from March last year, Finbond received a 0.01% commission on all transactions originated through its origination channels, without having to spend any management time, physical expense or effort on the various channels.