South Africa's Abil says FY earnings to drop by 90 pct


JOHANNESBURG (Reuters) - South African lender African Bank Investments (Abil) said on Friday full-year earnings likely tumbled by as much as 90 percent, hit by ballooning bad loan costs, and said it would increase the size of a planned rights issue of new stock.

Abil, which is due to release its full results on November 11, had already warned last month that earnings likely fell as much as 63 percent.

The bank has been hit hard as its target market of low-income borrowers struggle to repay their loans due to sluggish growth and chronically high unemployment in Africa's biggest economy.

The lender, which does not take deposits and is therefore reliant on the bond market for funding, said headline earnings for the year through September were likely to be as low as 37 cents, down from 378.2 cents a year earlier.

It said in a statement on Friday it had increased its provisions against bad loans and had written off other bad debts.

The changes to its provisions would lead to a hit of 2.2 billion rand to its net income, Abil said.

It will also increase the size of a planned rights issue to 5.5 billion rand from 4 billion.

Abil's shares tumbled 6.4 percent to 15.82 rand, making it the biggest percentage decline on the broad All-Share index.

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