EDITORIAL | African Bank job cuts a blow for employment

News that African Bank plans to cut almost a third of its employees has cut deep as South Africa grapples a stubbornly high unemployment rate. The bank told its employees last week of its proposal to reduce costs that will see the cutting of 1,200 jobs and the closure of 90 branches.

The bank said it had little choice but to review its employee expenses as costs exceeded risk-adjusted revenue in its six months ended March 2026.

African Bank, which employs about 4,000 people, reported a R624m loss for the six months ended March 2026, at a time when South Africa’s major banks had raked in about R150bn in profits in 2025, driven by strong revenues and deal making.

The group’s lower earnings was mirrored by a drop in total net income and a worsening credit loss ratio driven by higher credit impairments. The bank said it was focused on cutting costs in its value chain including IT, procurement and lease agreements.

African Bank said that it was engaging with finance union Sasbo regarding the proposed job cuts and the decision had not been taken lightly and was a direct result of its current business realities.

“While we continue to explore all cost-saving avenues to minimise the impact on people, we have reached a point where we have no other option, but to review our staff cost,” said the group last week.

The group, which has shed its identity of being a monoline lender, has diversified into business and commercial banking after following an ambitious expansion strategy.

Under its Excelerate Strategy to diversify its footprint, African Bank grew too quickly as it acquired Grindrod, Ubank, Sasfin’s Capital Equipment and Commercial Property Finance divisions. This likely left the group overextended.

As a result, under interim CEO Zweli Manyathi, African Bank announced in June a step change in strategy of “operational consolidation”. It also delayed its plans to list in 2028 to 2030 as the group pushes for profitability.

In March the bank also made the headlines after previous CEO Kennedy Bungane quit after a fallout with chairperson Thabo Dloti after regulatory filing missteps and the bank’s financial performance.

The group should do more to inspire confidence of its customers and shareholders; the South African Reserve Bank, the Government Employee Pension Fund and the consortium of banks.

While job cuts are at times inevitable, the group should go back to the drawing board to find ways to drive profitability and retain market share.