BAF reported Q2 profit after tax (PAT) of R4.1b +46% y-o-y, driven by 47% loan growth. Spreads were largely stable q-o-q (NIM down 70bp y-o-y). Gross NPLs were largely stable y-o-y (1.58%). Growth continued to be driven by consumer business
that grew at a strong 52% rate in Q2.
We note that in H217 the growth base for BAF will become slightly more challenging. Further, the company has indicated that it will look to slow down its growth temporarily in the consumer durable segment on account of a slight uptick in delinquencies there.
As portfolio performance improves over time,they will again look to re-accelerate the growth there. Overall new customer acquisition grew at 30% and cross-selling franchise growth was even better at 38%. Overall we think BAF is well placed to deliver on its consumer/SME strategy and grow at a +30% rate over the next 2-3 years.
Opex rationalisation should continue to happen as the portfolio builds up and the benefits of the go-direct strategy accrue over time.