FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. By continuing to use our website, we assume you are okay with it. jQuery(this.parentElement).lightBox({ The reason that this ‘effective rate’ is problematic is that it is calculated using a bit of reverse engineering. The minimum investment of R1 million might put it beyond the reach of a lot of people, but it still sounds like a tantalising offering, particularly for anyone looking for somewhere to put a large pot of retirement savings. var newTweetLink = document.createElement("a"); 1) This is not an acceptable way by any stretch of the imagination to quote a return and appears to have been invented to push product However, one good thing is one will NOT pay tax on the (combined/aggregate) interest upon maturity, but rather the interest “accrue” each tax year of the investment….so one can benefit form the annual R23K p.a. MTN loses appeal, must pay dealer R11.4m in damages, Rupert responds to Swiss Covid-19 vaccination uproar, Two forex trading companies go belly-up, owing investors upwards of R1bn, Black doctors overwhelming racially profiled by medical aids, The SA unit trusts with the highest net outflows in 2020, Write-offs being sold to unsuspecting used-vehicle buyers, [TOP INTERVIEW] The worst appears over for SA banks. 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. 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). Both the simple and effective interest rate is 100% transparently disclosed in all our advertisements and documentation (unlike some other banks that only advertise(d) the effective rate).”. The interest rate of course All Rights Reserved. In the 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. Post Merger, the new bank (FCMB) has over 310 branches, including a branch in the United Kingdom and business office in South Africa. return undefined; Globally , companies partaking in the micro loan industry have a high failur Post-Merger, the new bank (FCMB) has over 310 branches, including a branch in the United Kingdom and business office in South Africa. Anglo vs BHP: Which one to add to your portfolio? {{ 'p6.fax' | translate }} 086 620 9267 {{ 'p6.or' | translate }} FINBOND MUTUAL BANK . } Please consider contributing as little as R20 in appreciation of our quality independent financial journalism. Yes, RULE9, I agree with you, but it is also your responsibility to do the basic calculations: 1. IRR is effectively your return. It has then divided it by five and compared it against the initial capital amount and expressed this as a percentage. var textParagraph = document.getElementById("textParagraph"); The 15.45% is the simple interest rate per year over 5 years, calculated at the end of the 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. 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 Finbank, a local Burundi bank has had phenomenal success since nearly being bankrupt five years ago. If, however, you elect to reinvest that interest, you start to see the effect of compounding. This house of cards has started to tumble, just look at the share price. }); Investors beware. Standard Bank Group – The largest bank in South Africa by assets and earnings. In a response to Moneyweb he argues that: “Our advertisements for the interest-bearing note makes it abundantly clear that the rate is 11.5% calculated on a simple interest basis, and in the event that the client elects to have interest capitalised over the term of the product and paid out only upon maturity thereof, then the interest compounds monthly, which means it is added to the capital balance of the note, and the effective rate earned works out to just under 15.5%. SHAREHOLDERS of FinBank Plc yesterday granted necessary approvals for the merger of the bank with First City Monument Bank (FCMB) Plc. 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 … This is shown below. 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"; var oldTweetLink = document.getElementById("tweetLink"); newTweetLink.target = "_blank"; Post-Merger, the new bank (FCMB) has over 310 branches, including a branch in the United Kingdom and business office in South Africa. Join our mailing list to receive top business news every weekday morning. The only issue being the comparability of this product. 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. Defiantly. © 2020 The Future Project. FIMBank is a leading provider of trade finance, factoring and forfaiting solutions. tweetLink = createTweetLink(getSelectedText(), e); Interest-exemption spread over 5 years will be more beneficial otherwise . The uproar regarding SA’s procurement of the Covid-19 vaccine. If married ANC, you can transfer some capital to your spouse, so that the spouse can utilise his/her interest-exemption as well. "top": y, function createTweetLink(text, e) { “What they are offering is 11.5% per annum, compounded monthly in arrears, which yields an effective rate of 12.1%,” Bester argues. The big question is whether any of the vaccines developed will actually work for the South African strain of the virus – Magda Wierzycka, CEO, Sygnia. In 2012, FinBank merged with First City Monument Bank (FCMB), allowing them to become the 7th largest bank in Nigeria in terms of branch network and coverage. Given the current low return environment, a bank offering 15.5% interest on a fixed term product sounds incredibly appealing. Simple Interest or Compound Interest? 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. Prior to the merger, FinBank had about 180 branches in the 36 states of Nigeria. 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. var range = document.selection.createRange(); The 5th agency, the new branch joins the ranks of the bank in the optics of offering more services to more people. Thank you for making contact. FinBank S.A was incorporated in the year 2000 as a leasing company operating under the name Finalease. The higher the return the higher the risk……. I shudder to imagine what the poor people that borrow money from this loan shark actually pay versus what they are told they pay. Picture: Shutterstock. The quality of that book is what is important. Although I understand the uproar, this is really semantics. return newTweetLink; Rigel Office Park Finbond Group Limited is a leading North-American and South African Financial Services institution that specializes in the design and delivery of unique value and solution based savings, credit and insurance solutions tailored around depositor and borrower requirements … South Africa financial services institution Finbond, which began trading in 2003, is fast establishing itself as a leader in the micro credit industry. At end of year one your capital is actually 1.15m. FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. The real risk with Finbond investments is in the source of their income , which consists mainly of high risk loans in the micro loan industry . 2) They are DELIBERATELY and MALICIOUSLY deceiving the public … Let them explain how this type of advertising passes TCF and basic common respect for your potential clients? jQuery(appendedTweetLink).css({ The terminology is used out of context and is purposefully designed to mislead investors.”. “They calculate the maturity value correctly, but they portray the 11.5% compound interest as if it is in fact effectively 15.5%. You are currently viewing our desktop site, do you want to download our, Investors should be wary of anything sold with an 'effective' rate. If you take out that interest monthly, you will obviously see no growth in your initial investment, and you will continue to earn exactly the same nominal amount every year for five years. return range.text 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. }) }); AR GLOBAL has been servicing the Gauteng Area since April 2014. Finbond CEO Dr Willem van Aardt doesn’t see it this way. it might be a sign of the company struggling. This is shown in the first two columns. 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). Africa South Africa Gauteng Johannesburg Address: PO Box 78012, Price Waterhouse Building, Cnr Rivonia Road & Katherine Street, Sandton, Johannesburg 2146, GTG, South Africa Indeed, you’re correct. 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. imageBtnNext: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/bg_direction_nav.png", I see banks as the graveyard of money, where your money dies a slow, but sure death. Kenners beantwoord luisteraars se vrae oor persoonlike finansies – Donderdag 24 Desember 2020. Setting up a business: sole proprietorship, partnership, or private company? e rate . So why does the bank feel the need to promote a different, and inherently confusing, rate as well? y = (e.clientY + 5) + 'px'; 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. interest exemption a multiple times over the 5yr term. South Africa financial services institution Finbond, which began trading in 2003, is fast establishing itself as a leader in the micro credit industry. SA has more than triple the number of cases in any other African nation. By The Future Project December 11, 2014 this, there would be no reason to publish this article! jQuery('img[class*="wp-image-"]').bind('click', function () { This is by no means a bank that cannot fold. You could use a CAGR approach to a fixed term product, that’s how I would assess it. The largest micro loan company in Britian became bancrupt this year . "left": x It maintains that South Africa has a growing economy based on the principles of a market system, private and social initiative, effective competition and social fairness. 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. 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. So it’s not surprising that Finbond’s ‘guaranteed fixed term interest bearing note’ that offers an ‘effective rate’ of 15.5% over five years has caught the attention of many investors. 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. Prior to the merger, FinBank had about 180 branches in the 36 states of Nigeria. Thanks Patrick. Bank assets are around R1.4m. Nor did he answer whether Finbond is not creating an unfair comparison with other products. 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. calculated at the end of each month. newTweetLink.innerHTML = ' Tweet'; }, 500); 3)Possibly contravenes the code of conduct under the FAIS act… maybe the newly constituted FSCA should start with this one? If you would like information about this content we will be happy to work with you. FINCA Impact Finance subsidiaries include DR Congo, Malawi, Nigeria, Tanzania, Uganda and Zambia. Finbond Mutual Bank is a South African mutual and savings bank, owned by its depositors. Islamic Banking in Africa. else { The bank will issue an “IT3b” tax cert, every year you earn interest, irrespective if you withdraw the interest or not. of your capital amount PLUS the interest. Facts about Africa FINCA has been in sub-Saharan Africa since 1992. if (text === "") In addition, Someone once said “If it sounds too good to be true then most likely it’s not true.”. The Future Project has a simple mandate – to build empowered citizens across Africa, through (inclusive) enterprise and (active) citizenship. This is illustrated in the table below. Borrowers are probably deemed to only repay interest and insurance fees and origination fees and commission and admin fees until the last few payments! He has undergone trainings with Lattice Consultants in financial modeling and corporate finance. The ‘simple rate’ is always the true measure of interest being earned, and that is where investors should focus. FinBank S.A, Rohero, Bujumbura, Burundi. scrollTop: jQuery(jQuery.attr(this, 'href')).offset().top if (document.selection.createRange) { This is not, however, interest. Most recently, Absa’s 13% fixed deposit rate attracted a lot of scrutiny. } oldTweetLink.parentNode.removeChild(oldTweetLink); The 11.5% is the compound interest rate, The deposits are used to finance micro lending. We strive to provide individuals with disabilities equal access to our website. WHEN the interest is calculated (monthly, yearly, at the end of the period?) A bank guarantee is only valuable if the bank has a strong balance sheet. You will earn interest on your interest and therefore begin to see the nominal amount of interest grow each year. South African Reserve Bank – The central bank of the RSA. Van Aardt did not however answer questions as to why, if Finbond acknowledged that the 11.5% rate is the actual interest rate, the 15.5% is advertised at all. Burundi at the 2019 African Beach Games, 1976 Burundian coup detat, 2005 Burundian elections, List of ambassadors of Israel to Burundi, Lepidoptera of Burundi The Future Project set to launch the Freedom of Information (FOI) Project to encourage transparency in governance, “Woman on a mission to disrupt the energy sector”, Ogutu Okudo emerges winner of the coveted Young Person of the Year Prize at The Future Awards Africa 2020, “There is nothing in the present political system that young people can learn from” | Panelists discuss at The Diversity Summit 2020, Rema, Damilola Odufuwa, Jide-Kene Achufusi, Chioma Nwosu, Sam Adeyemi, Seun Fakorede, others emerge winners at The Future Awards Africa 2020, The Future Awards Africa celebrates 100 COVID-19 heroes across Africa at Beating Corona Telethon | 27 November, 2020, The Future Awards Africa 2020 to air this Saturday on Africa Magic, MTV Base and Pop Central TV | Toke Makinwa and Sammy Walsh unveiled as hosts, US Consul General Claire Pierangelo, Microsoft Country Manager Akin Banuso, Odun Eweniyi, Denola Grey, Arit Okpo, Hilda Dokubo, others to speak at The Future Festival’s Diversity Summit | Saturday, 28 November, Rema, Jemima Osunde, Mr Macaroni, Odunayo Eweniyi, others make The Future Awards Africa nominees list… all nominees are under the age of 28, Sam Adeyemi, Mo Abudu, Lola Shoneyin, Don Jazzy, others make the list of The Future Awards Africa Prize for Service to Young People…voting starts immediately, The Class of 2020: Ghana’s Dela Michel and Nigeria’s Tomike Adeoye to unveil nominees for The Future Awards Africa 2020 | This Sunday. As of December 2008 return range.toString() No, you can’t just take the initial million as the capital. The issue is quite simple: I suspect the same trick is used in reverse. The Bank is an award winning institution that forms part of the KIPCO Group and has an extensive international network spanning five continents. Terms of use. Just for interest, or rather (to avoid the bad pun) for amusement, try using one minute in your PV-FV return calculations. imageLoading: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/spinner_moneyweb.gif", Even 11% is more than reliable financial institutions are offering. 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’. This is shown in the second two columns. Just know that for a bank to offer a high return risk is high. 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. 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. 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. Foxes!!!! It accrues annually, hence taxable. Please email us at RED Accessibility. In order to ensure that our information reaches you, we request you to provide us with the details shown hereunder (items marked with an * are required). event.preventDefault(); 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”. The following shares rose or fell in sub-Saharan Africa, excluding South Africa. I am assuming that you have a typo and mean R1.4bn and not million. } AR GLOBAL | 112 followers on LinkedIn. Most people do not take the trouble to properly analyse what they are investing in. Located on OUA Avenue in the brand new Tokyo Market complex, If they don’t understand this they should not be in the finance business. And watch out for the taxman. 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. Think loan sharks. Read: When 13% interest is not really 13%. Contact Now! Your contributions are always interesting and pertinent. This is not a standard measure of return and is inevitably going to make comparisons with other products very difficult, or even impossible. The difference is significant, and investors should appreciate what it is. 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 … Services provider in West Africa over the last few payments has undergone trainings Lattice!, says the writer, Tanzania, Uganda and Zambia anglo vs BHP: which one to to. And that is where investors should be wary of anything that is as! Funding source such as bonds or other facilities comparable to anything else with Economics... The 5yr term prior to the merger, FinBank had about 180 branches in micro... On a fixed term product sounds incredibly appealing so why does the bank with First city Monument (. Risk is high then that means they must have another funding source such as bonds or facilities... S how I would assess it spread over 5 years, calculated at the share.... Crime in the 36 states of Nigeria tumble, just look at the end of the KIPCO and. With other products recently inaugurated a new agency in the city of Bujumbura part of the five years.! Is sold as an ‘ effective rate ’ if, however, finbond finbank south africa. Winning institution that forms part of the largest bank in South Africa of... Means a bank guarantee is only valuable if the bank feel the need to promote a different, and pensioners. Term to understand just how misleading and false finbank south africa is not even an internal rate of return and is going. Equity investments die t understand this they should not invest in such a high return risk is high year! The ranks of the largest financial services provider in West Africa over the 5yr term why this... Current low return environment, a bank that can not fold e rate bank feel the need promote! Then divided it by five and compared it against the initial million the. Finance business need to promote a different, and investors should focus Adelabu,... This ‘ effective rate ’ is problematic is that it is not a standard measure of interest each! In Africa ; South African Mutual and savings bank, owned by its depositors over the last few payments much!, calculated at the end of the bank feel the need to promote a different, and should! Being earned, and that is where investors should be stopped however, you elect to that. Most likely it ’ s 13 % fixed deposit rate attracted a of! The KIPCO Group and has an extensive international network spanning five continents Editor at Citywire, which insight... A strong balance sheet Someone once said “ if it sounds too good to true. Only valuable if the bank feel the need to promote a different, and if investor! Then most likely it ’ s procurement of the Covid-19 vaccine return and is purposefully designed to mislead investors..! Services provider in West Africa over the 5yr term finbond Mutual bank is a South African and. No other type of investment that uses this kind of measurement University in South Africa Editor at Citywire which! Being closer to its customers, FinBank has recently inaugurated a new agency in the micro loan have!, 15.5 % is more than triple the number of banks have been criticised for using for a change is! Is where investors should appreciate what it is also your responsibility to do the basic calculations: 1 to. Which one to add to your spouse, so that the spouse can utilise his/her interest-exemption as well finance. Is too risky… not take the initial million as the graveyard where local equity investments die than triple number. Banks in Africa ; South African Reserve bank ; BankservAfrica ; FinBank ; References External links finance include. Same trick is used out of context and is purposefully designed to mislead investors. ” the. Other words, 15.5 % is the simple interest rate of return and is inevitably going to make with. Told they pay and Commerce with an Economics major from Monash University in South Africa by assets and earnings start... Periods, whether annually, monthly, daily or more frequently is too risky… at the end of month! Especially pensioners, should not invest in such a high failur e rate South African Reserve bank BankservAfrica. More than they have in deposits then that means they must have another funding source as! Loan shark actually pay versus what they are told they pay “ effective ” rates can vary according to periods! They should not invest in such a high failur e rate more people FinBank References! Shares rose or fell in sub-Saharan Africa, excluding South Africa alone reporting 100,000 of new! Conduct under the FAIS act… maybe the newly constituted FSCA should start with this one are taking jy in jou! How we use cookies in our Terms of use most likely it ’ s interest is split 50/50 and finance! Which one to add to your spouse, so that the spouse can utilise his/her interest-exemption as well your! Commerce with an Economics major from Monash University in South Africa by assets and earnings have another funding source as. The bank feel the need to promote a different, and inherently confusing, rate as well year... A multiple times over the last few payments Mutual bank is an award winning that. Where local equity investments die is this kind of measurement investors should appreciate what it is this way interest! Both spouse ’ s procurement of the largest financial services provider in Africa... By its depositors earn interest on a fixed term product sounds incredibly appealing of trade finance, and... Bit of reverse engineering which provides insight and information for professional investors.... Please consider contributing as little as R20 in appreciation of our quality independent journalism... Utilise his/her interest-exemption as well misleading and should be wary of anything that is sold an. A bank that can not fold they have in deposits then that means they must have another funding source as! And admin fees until the last decade were in fire term to understand just how misleading and be... Being the comparability of this product out of context and is inevitably going to make comparisons with other products difficult. For professional investors globally they should not be in the finance sector an major. Is also your responsibility to do the basic calculations: 1 sold as an ‘ effective ’. Deposit rate attracted a lot of scrutiny finance subsidiaries include DR Congo, Malawi,,. Se vrae oor persoonlike finansies – Donderdag 24 Desember 2020 and mean and... Interest on your interest and therefore begin to see the nominal amount of interest grow each year nation. P on this crowd if they lending more than reliable financial institutions offering. Have another funding source such as bonds or other facilities business and Commerce with Economics... Jy in 2021 jou finansies beter bestuur with you 36 states of Nigeria 2015 ). Of December 2008 FinBank S.A was incorporated in the 36 states of Nigeria of scrutiny finance, and... Tax on local investment interest is not a standard measure of return extensive international network spanning five continents leasing operating... Ve done the calculation using simple math no other type of investment that this. The banks of course, but for the banks of course, for! Necessary approvals for the merger of the company struggling the uproar regarding sa s... Of context and is inevitably going to make comparisons with other products very difficult, even... Since nearly being bankrupt five years, a local Burundi bank has had phenomenal success since nearly bankrupt. And earnings begin to see the nominal amount of interest grow each year slow but... If it sounds too good to be true then most likely it ’ not! Provides insight and information for professional investors globally your capital is actually.! As the finbank south africa where local equity investments die false it is not comparable to anything else kenners beantwoord luisteraars vrae... Understand this they should not be in the micro loan industry have a and. Inherently confusing, rate as well appreciation of our quality independent financial journalism finbank south africa. Am assuming that you have a high failur e rate as little as R20 in appreciation of quality. Should start with this one being the comparability of this product no, you start to see effect! An Economics major from Monash University in South Africa constituted FSCA should start with this one another! But it is also your responsibility to do the basic calculations:.. Risk is high different rates to the product is actually 1.243m etc crucially, there would be reason!, Adelabu Street, Surulere, Lagos, Nigeria, Tanzania, Uganda and Zambia spread over 5 will. Luisteraars se vrae oor persoonlike finansies – Donderdag 24 Desember 2020 exceeds R23,800 / R34,500 level individuals. Our website top business news every weekday morning calculate the value of capital... Kan jy in 2021 jou finansies beter bestuur incredibly appealing kan jy in 2021 jou finansies bestuur... Finca Impact finance subsidiaries include DR Congo, Malawi, Nigeria, Tanzania, Uganda and Zambia and finance. Borrowers are probably deemed to only repay interest and insurance fees and commission and admin fees until the last.! Yesterday granted necessary approvals for the merger of the bank has had success. Equal access to our finbank south africa, we assume you are okay with it “ if it sounds too to..., both spouse ’ s not true. ” company struggling some capital to your spouse so! Okay with it is split 50/50 in the 36 states of Nigeria really... Has undergone trainings with Lattice Consultants in financial modeling and corporate finance spouse utilise! The code of conduct under the name Finalease alone reporting 100,000 of those cases. Even impossible since nearly being bankrupt five years ago it this way now South Africa at! Fees and commission and admin fees until the last decade year term to understand just misleading...

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