René van
Wyk (48)
Acting Chief Executive
BCom (Hons), BCompt, CA (SA), AMP (INSEAD) |
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René joined Nedcor in 1993, having
previously been a partner at KPMG. He joined Imperial Bank
Limited on 15
September 2004 as acting Chief Executive while retaining
certain responsibilities at Nedcor.
Overview
Imperial Bank Limited (IBL) is an independently
regulated bank with two major shareholders, namely Nedbank
(50,1%)
and Imperial Holdings Limited (49,9%). Nedbank assists in
all risk-related matters and has representatives on Imperial
Bank’s credit committees. The bank’s Asset and
Liability Committee is chaired by a Nedbank representative
and much of the treasury risk is managed by Nedbank by virtue
of the funding arrangement agreed to by the shareholders.
Imperial Bank relies strongly on its shareholders, with Nedbank
providing the vast majority of the funding and Imperial Holdings
directing business to the bank through its extensive motor
franchises.
The bank, which was incorporated in 1996, aims to be a
niche player and is primarily engaged in asset-based financing.
Motor Finance makes up the majority of the advances (52%)
followed by Property Finance (24%),Asset-based Finance (14%),
Medical (7%) and NRB Risk Solutions (3%).
Review of the year
Results during 2004 were disappointing,
primarily due to large bad-debt provisions in Aviation
Finance as well as
losses on the aviation business. This is the first year
in which the bank has not shown earnings growth on the previous
financial year, with earnings dropping from R232 million
to R165 million.
Financial highlights and statistics
Imperial Bank for
the year ended 31 December
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| Rm |
2004 |
2003 |
| Headline earnings |
83 |
116 |
| Average advances |
14 014 |
10 300 |
| Impairments to advances % |
4,2 |
4,6 |
| Efficiency ratio % |
48,1 |
43,1 |
| Return on average assets % |
0,55 |
1,16 |
| Return on average equity % |
11,33 |
16,70 |
| Number of clients |
119 204 |
84 784 |
| Number of employees |
753 |
643 |
The Motor Finance Corporation (MFC) was the strongest performer,
doubling profit before tax, while the Medical Division, which
is still not making acceptable returns, has made vast inroads
into its niche market. Property Finance has
had another excellent year on the residential development
side, but penetration into the commercial market was significantly
below expectations. Credit losses experienced through the
fraud of one significant client and ill-managed costs marred
the division’s results.
Asset-based Finance experienced reasonable performances
from Corporate Asset Finance and Supplier Finance, but suffered
significant losses in the aviation arena. These losses are
indirectly related to the weakening of the US dollar and
the continued weakness in the global aviation market. This
has affected Imperial Bank’s aviation charter clients
in particular and represents the second year of exceptional
losses. It is anticipated that 2005 will be better, but the
division will continue to be at risk while the aviation sector
is weak.
The majority of the book housed in NRB Risk Solutions has
been collected, and the purchased discount realised, over
the last two years. The earnings of NRB Risk Solutions, which
have declined as the book has run off, are in line with expectations.
Prospects
The major challenges for 2005 will be to contain
costs in order to return the cost-to-income ratio to below
40%
and to limit bad debts through tight management of delinquent
aviation clients, while still aiming to achieve return on equity
and gross advance growth in excess of 20%.
Economic conditions in 2005 are expected to remain largely
favourable and MFC should continue to grow market share,
aiming to get to 14% of the passenger vehicle market by the
end of 2005. Property Finance aims to expand its commercial
book to increase net interest income as a proportion of earnings
and prepare itself for an anticipated slowdown in the residential
development market.The strong growth of the Medical Division
is expected to continue.
Imperial Bank is in the process of implementing the Barnowl
system, which will assist with the identification, monitoring
and control of operational risk. The bank will also increase
its efforts with regard to Basel II to implement the advanced
model approach in line with Nedcor. |
