It is not even an internal rate of return. newTweetLink.id = "tweetLink"; Finbond Platinum is based in Somerset West, and aims to be a leading Afrikaans banking service in South Africa, offering sterling and unmatched personal Platinum style service at … 2. Not for the banks of course, but for the depositor. Join our mailing list to receive top business news every weekday morning. It has then divided it by five and compared it against the initial capital amount and expressed this as a percentage. The 15.5% is obviously being promoted given its larger positioning, but there is also the rate of 11.5%, which it calls ‘simple interest’. Simple Interest or Compound Interest? if (oldTweetLink != null && typeof oldTweetLink != "undefined") { This is illustrated in the table below. Africa South Africa Gauteng Johannesburg Address: PO Box 78012, Price Waterhouse Building, Cnr Rivonia Road & Katherine Street, Sandton, Johannesburg 2146, GTG, South Africa Prior to the merger, FinBank had about 180 branches in the 36 states of Nigeria. Crucially, there is no other type of investment that uses this kind of measurement. This is shown below. As of December 31, 2016, there were 36 approved representative offices emanating from 20 countries. } }); return undefined; Kenners beantwoord luisteraars se vrae oor persoonlike finansies – Donderdag 24 Desember 2020. FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. Defiantly. newTweetLink.innerHTML = ' Tweet'; }, 500); The terminology is used out of context and is purposefully designed to mislead investors.”. What Finbond has done to get to the 15.5% ‘effective rate’ is to calculate the total growth on compounded investment amount (shown at the bottom of the third column). We strive to provide individuals with disabilities equal access to our website. N10.9bn Fraud: Court Jails Ex-Finbank MD, Nwosu, Three Others 6 January 2021 National News News Justice Lateefa A. Okunnu of the Lagos State High Court sitting in Ikeja, on Tuesday, January 5, 2021, convicted and sentenced Okey Nwosu, a former Managing Director, Finbank Plc, to three years imprisonment for over 10m fraud. Bank of Taiwan South Africa Branch: 2 008: 1 592: 26.14: 13: Bank of India: 427: 478-10.76: 14: Canara Bank: 328: 400-17.88: 15: ICICI Bank Limited: 269: 250: 7.75: Foreign Banks with Approved Local Representative Offices. In other words, 15.5% is not comparable to anything else. imageLoading: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/spinner_moneyweb.gif", Nor did he answer whether Finbond is not creating an unfair comparison with other products. Historically when a company offers much higher interest compared to its peers, Five payments of R115K + the end capital equates to an effect annualized return (IRR) of 8.5-8.7%, nothing better than the average bond fund. Facts about Africa FINCA has been in sub-Saharan Africa since 1992. This is not, however, interest. Within South Africa, Johannesburg takes the crown as the top destination for investment bankers, with bulge bracket firms often opting for the city which has turned into an international finance centre and is the economic hub of South Africa. than 50 Islamic financial institutions in Africa out of 600 institutions globally1. The bank will issue an “IT3b” tax cert, every year you earn interest, irrespective if you withdraw the interest or not. If you’re Community of Property married, both spouse’s interest is split 50/50. Following a listing on the Johannesburg Stock Exchange, Finbond received a further stamp of approval with the awarding of its banking licence from the South African Reserve Bank in 2012. Rigel Office Park if (document.selection.createRange) { The largest micro loan company in Britian became bancrupt this year . } }); A CEO should know better than to try this short-term gimmick – Finbond will lose customers over time when they find they’ve been misled. Okey Nwosu, a former Managing Director, Finbank Plc, was sentenced today to three years imprisonment over N10.9billion fraud. Thank you for making contact. var range = document.selection.createRange(); Website of Reserve Bank of South Africa; Classification of South African Financial Institutions; This page was last edited on 7 March 2020, at 20:20 (UTC). var oldTweetLink = document.getElementById("tweetLink"); var x = (e.clientX + 5) + 'px', The difference is significant, and investors should appreciate what it is. return newTweetLink; In addition, Someone once said “If it sounds too good to be true then most likely it’s not true.”. …and add to that, the JSE is the graveyard where local equity investments die? var textParagraph = document.getElementById("textParagraph"); Moneyweb requires cookies to function properly. The quality of that book is what is important. I would like to assume that if you are placing R1m+ in a product like this then you are doing a good comparison of products with multiple methodologies to make sure you max your returns. if (textParagraph) { Terms of use. Foxes!!!! Post Merger, the new bank (FCMB) has over 310 branches, including a branch in the United Kingdom and business office in South Africa. We fight poverty in the region by ensuring low-income and unbanked Africans can access basic financial services including: • loans to build a business and grow livelihoods You are currently viewing our desktop site, do you want to download our, Investors should be wary of anything sold with an 'effective' rate. Finbond Mutual Bank specializes in the design and delivery of unique value and solution based savings and credit solutions tailored around depositor and borrower requirements … The period of the investment newTweetLink.href = "https://twitter.com/intent/tweet?text=" + encodeURI(text) + "&url=https://www.moneyweb.co.za/investing/is-finbond-really-paying-15-5-interest/&via=Moneyweb"; oldTweetLink.parentNode.removeChild(oldTweetLink); © 2020 The Future Project. So why does the bank feel the need to promote a different, and inherently confusing, rate as well? Prior to the merger, FinBank had about 180 branches in the 36 states of Nigeria. The Future Project has a simple mandate – to build empowered citizens across Africa, through (inclusive) enterprise and (active) citizenship. Just let Finbond join the list with ABSA and Standard Bank of dubious providers of spurious interest rates calculated in a way nobody with an inkling of education would allow. }); Investors beware. Why is this kind of misleading advertising not illegal? tweetLink = createTweetLink(getSelectedText(), e); Borrowers are probably deemed to only repay interest and insurance fees and origination fees and commission and admin fees until the last few payments! A rational and moral investor would not p on this crowd if they were in fire. Islamic Banking in Africa. If, however, you elect to reinvest that interest, you start to see the effect of compounding. If they don’t understand this they should not be in the finance business. After all, 11.5% is still an extremely attractive return. The banking licence was granted by the South African Reserve Bank in May 2012 and gave Finbond the opportunity to raise funds from the public … 4. Your AR Staffing Specialist. imageBtnNext: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/bg_direction_nav.png", He has undergone trainings with Lattice Consultants in financial modeling and corporate finance. Let us know what's on your mind. newTweetLink.target = "_blank"; I am personally not surprised to be informed that Finbond does this but I am disappointed to hear that ABSA also did it as I normally have reasonable trust in ABSA. According to data from Africa CDC, over the past week, cases decreased by nearly 7% compared to the previous week while deaths increased by 10%. var newTweetLink = document.createElement("a"); The only issue being the comparability of this product. After all, there isn’t a single multi-asset high equity fund in South Africa that has given investors even a 10% annualised return over the past five years. By The Future Project December 11, 2014 Indeed, you’re correct. South Africa financial services institution Finbond, which began trading in 2003, is fast establishing itself as a leader in the micro credit industry. jQuery(document).ready(function () { jQuery(this.parentElement).lightBox({ FIMBank is a leading provider of trade finance, factoring and forfaiting solutions. Although I understand the uproar, this is really semantics. The interest rate of course I am assuming that you have a typo and mean R1.4bn and not million. This is by no means a bank that cannot fold. The following shares rose or fell in sub-Saharan Africa, excluding South Africa. FinBank S.A was incorporated in the year 2000 as a leasing company operating under the name Finalease. I am not attacking Banks, they are doing their jobs, but this is no different from The Carbonaro Effect: A friendly greeting in the beginning by an open and honest boyish face, and terminated by an “I Got You”, with a lot of BS-magic (or Cara in Arabic) inbetween. Unfortunately your assumption would be wrong. You may wish to refer to the FIMBank Group Contact list which can be located here and can also contact us by email or by filling in the contact form shown below. Hendrik Bester, a retired actuary and former CEO of Sanlam Asset Management, argues that it is “a totally nonsensical calculation” and “no recognised measure of return”. to quote a return on the initial advance only should constitute a crime in the finance sector. According to the global financial agency, Moody’s, since 2014, $2.3 billion in Sharia-compliant bonds have been issued in Africa.The agency notes that there have been an increase in the number of licensed Islamic financial institutions, rising to over 80 in the last five years. Globally , companies partaking in the micro loan industry have a high failur AR GLOBAL | 112 followers on LinkedIn. He also holds a Bachelor of Business and Commerce with an Economics major from Monash University in South Africa. }, false); FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. If they lending more than they have in deposits then that means they must have another funding source such as bonds or other facilities. The bigger question is what is the risk investors are taking. Read: When 13% interest is not really 13%. "top": y, Burundi at the 2019 African Beach Games, 1976 Burundian coup detat, 2005 Burundian elections, List of ambassadors of Israel to Burundi, Lepidoptera of Burundi Finbond CEO Dr Willem van Aardt doesn’t see it this way. Hoe kan jy in 2021 jou finansies beter bestuur? On the whole, investors should be wary of anything that is sold as an ‘effective rate’. Finbond received its banking licence from the South African Reserve Bank in July last year and is a member of the Banking Association of South Africa. I suspect the same trick is used in reverse. Take their approach forward to a 20 year term to understand just how misleading and false it is. The issue is quite simple: Bank assets are around R1.4m. Picture: Shutterstock. Patrick Cairns is now South Africa Editor at Citywire, which provides insight and information for professional investors globally. FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. e rate . To compare to other investments, you use the above to calculate the value After all, there isn’t a single multi-asset high equity fund in South Africa that has given investors even a 10% annualised return over the past five years. Finbank Innovation Conference & Expo 2021 is the right platform to stimulate collaborations and inclusion of the new technologies, this is an opportunity for Fintech Startups and other Fintech Companies looking to launch new products on the African market. If married ANC, you can transfer some capital to your spouse, so that the spouse can utilise his/her interest-exemption as well. it might be a sign of the company struggling. else { Just know that for a bank to offer a high return risk is high. interest exemption a multiple times over the 5yr term. It is not a standard measure of return, says the writer. Thanks Patrick. textParagraph.addEventListener("mouseup", function (e) { Interest-exemption spread over 5 years will be more beneficial otherwise . Finbond Micro Finance Phone and Map of Address: Shop F11 Station Plaza, Mitchell's Plain, 7785, South Africa, Western Cape, Business Reviews, Consumer Complaints and Ratings for Micro Loans in Western Cape. SA stocks resist risk-off slide as Mr Price gains, Court decision opens the way for consumers to get billions in fees back, Audit rotation hits KPMG, benefits rivals, Asset management strategies change over the years, SA stocks fall, paring best November gains since 2001, Santam fails to get Guardrisk’s Café Chameleon appeal postponed, How to set yourself up early for financial success. if (window.getSelection) { It accrues annually, hence taxable. A bank guarantee is only valuable if the bank has a strong balance sheet. event.preventDefault(); The 11.5% is the compound interest rate, The uproar regarding SA’s procurement of the Covid-19 vaccine. The ‘simple rate’ is always the true measure of interest being earned, and that is where investors should focus. “What they are offering is 11.5% per annum, compounded monthly in arrears, which yields an effective rate of 12.1%,” Bester argues. Long term investor , and especially pensioners , should not invest in such a high risk investment bank . if (text === "") Many conventional banks across the continent including National Bank of Egypt, FinBank of Nigeria, Absa Bank of South Africa or First Community Bank of Kenya have also started to offer Shariah-compliant banking products through Islamic window set-up. As of December 2008 It is one of the twenty-five (25) commercial banks licensed by the Central Bank of Nigeria, the country’s banking regulator. I was under the impression that even if interest is paid out at the end of 5 years one still has to pay tax on the interest annually.Maybe I’m wrong. It seems that Finbond CEO Dr Willem van Aardt didn’t go to money school, or is trying to deliberately mislead the people. Standard Bank Group – The largest bank in South Africa by assets and earnings. (“circa 2015”) , Dayview, I think I should perhaps try Gold derivatives for a change Bitcoin is too risky…. He also did not respond to Moneyweb’s request to explain why Finbond would use this kind of calculation when other banks have been consistently criticised for similar practices. This house of cards has started to tumble, just look at the share price. And watch out for the taxman. {{ 'p6.fax' | translate }} 086 620 9267 {{ 'p6.or' | translate }} FINBOND MUTUAL BANK . This is shown in the second two columns. In the Located on OUA Avenue in the brand new Tokyo Market complex, Anglo vs BHP: Which one to add to your portfolio? The higher the return the higher the risk……. Strange and unique ways of calculating interest designed to appeal to your greed and entice you to give this mutual bank your money should be a WARNING to you. jQuery('img[class*="wp-image-"]').bind('click', function () { The 15.5% is promoted as an ‘effective rate’. You are making a bunch of assumptions, I have not had a detailed look at their financials and yes they are a small bank but being in the micro loan business does not automatically make you a small risky bank. Finbond Mutual Bank is a South African mutual and savings bank, owned by its depositors. } Given the current low return environment, a bank offering 15.5% interest on a fixed term product sounds incredibly appealing. | AR GLOBAL Is a Recruitment Company Specializing In Sourcing Highly Skilled, Qualified & Experienced Debtors Management Staff from Credit Managers & Debtors Supervisors to Credit Controllers, Rebate Controllers, Claims Clerks and general Debtors Department staff. 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