Ubank hiring aimed at growth among workers

Ubank's Luthando Vutula says the bank will diversify away from the mines and include farm workers, teachers and others. Image: Ubank

Parent company Barclays Africa has also strengthened it by deploying experienced bankers as part of its plans to grow the micro-financier and diversify beyond mine workers.

The bank‚ now run by former Absa head of home loans Luthando Vutula‚ has set itself medium-term targets that include raising R1.3bn in the form of debt and equity to grow the bank.

Ubank‚ previously Teba Bank‚ is a retail bank used by mine workers mostly aligned with the National Union of Mineworkers (NUM). It is owned by a trust managed by the Chamber of Mines and NUM.

The building of depth at the bank with more solid leadership and ambitious growth plans could make it vulnerable to deal hunters looking to buy a bank with growth potential.

ATM roll-out planned

"We are planning to roll out between 300 and 500 ATMs (automated teller machines) in the next three years‚" Vutula said. The company is also looking to expand its presence to the Northern Cape‚ to serve mine workers there‚ in KwaZulu-Natal and Western Cape.

"These are provinces that we want to start looking at. In the Western Cape we want to focus on farm workers; in the Northern Cape there are mines; in KwaZulu-Natal there are coal mines‚" Vutula said.

He said 80% of Ubank's loan book was in the mining sector. With strikes affecting the sector and workers losing salaries‚ the bank was suffering‚ prompting it to restructure some loans.

Vutula said Ubank's loan book was close to R1bn. The company had a balance sheet of R4bn.

Commenting on the challenges in mining‚ he said: "We are the bank in mining. We understand people have not had salaries. We have looked at restructuring loans."

New markets

He said the bank had started a campaign to meet customers to understand their financial position. Ubank would reach at least 40‚000 consumers in the next month.

Despite the challenges‚ he was convinced the bank would be profitable when posting results.

"Last year it was tough. We have changed that situation‚ improved our credit book‚ cut costs and while we made a loss last year, this year we are definitely going to make a profit‚" he said.

He said Ubank had managed to grow its non-interest revenue by retaining customers and getting them to do more with the bank.

Vutula says Ubank has about 400‚000 customers and the intention was to increase this to between 1.5m to 2m in the next three to five years.

Mr Vutula said that Ubank wanted to be "a worker's bank of choice"‚ retaining its presence in mining but also targeting teachers‚ nurses and farm workers.

The bank‚ which offers funeral insurance‚ transactional banking and loans‚ is looking to offer home loans to the working class but to cap these at R500‚000‚ and car finance at R300‚000.

Vutula said another plan was to introduce credit cards.