Seeking Alpha: African Bank Investments Looks To Rally From The Bottom

South Africa's African Bank Investments Ltd (OTCPK:AFRVY) is technically a bank, but it's nothing like what that word probably conjures up in most reader's minds. Tracing its history back to microlending, ABIL is Africa's largest provider of personal loans in South Africa and a specialist in unsecured lending. ABIL's unsecured personal lending business is not the same as the payday lending of American companies like Cash America (CSH), but it's also most definitely not the same as the secured lending operations of "regular" banks like Citigroup (C) or South Africa's Big Four banks (Standard Bank (OTCPK:SGBLY), FirstRand (OTCPK:FANDY), Nedbank (OTCPK:NDBKY), and Absa Group).

ABIL has gotten absolutely hammered over the past two years as market issues and challenges like over-indebted South African consumers and increasing regulation have combined with company-specific issues relating to provisioning to undermine earnings and investor confidence. Management believes it has shored up its capital and fixed its provisioning issues. Although the shares do appear priced to generate good returns if that is in fact the case, I believe the quality of management is a major risk factor here and one that makes these shares a real speculation even at these low levels.

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African Bank Investments Looks To Rally From The Bottom