Yes, RULE9, I agree with you, but it is also your responsibility to do the basic calculations: 1. And watch out for the taxman. Following the agenda of being closer to its customers, FinBank has recently inaugurated a new agency in the city of Bujumbura. Picture: Shutterstock. This is a confusing term that a number of banks have been criticised for using for a number of years now. } AR GLOBAL | 112 followers on LinkedIn. FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. oldTweetLink.parentNode.removeChild(oldTweetLink); Post-Merger, the new bank (FCMB) has over 310 branches, including a branch in the United Kingdom and business office in South Africa. var newTweetLink = document.createElement("a"); If you would like information about this content we will be happy to work with you. Long term investor , and especially pensioners , should not invest in such a high risk investment bank . Join our mailing list to receive top business news every weekday morning. Thanks Patrick. This is a shocker. 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”. IRR is effectively your return. Even 11% is more than reliable financial institutions are offering. 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. Finbond Mutual Bank is a South African mutual and savings bank, owned by its depositors. }); Foxes!!!! It is necessary to compare only nominal rates. As of December 31, 2016, there were 36 approved representative offices emanating from 20 countries. The continent reported 207,000 new cases in the past week, with South Africa alone reporting 100,000 of those new cases. 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. Your contributions are always interesting and pertinent. imageLoading: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/spinner_moneyweb.gif", It has then divided it by five and compared it against the initial capital amount and expressed this as a percentage. We strive to provide individuals with disabilities equal access to our website. I am greatful for journalism that exposes it. South Africa financial services institution Finbond, which began trading in 2003, is fast establishing itself as a leader in the micro credit industry. }); Anglo vs BHP: Which one to add to your portfolio? newTweetLink.target = "_blank"; } 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. Hoe kan jy in 2021 jou finansies beter bestuur? 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 The largest micro loan company in Britian became bancrupt this year . This was done in this article, and if every investor actually calculated This is not, however, interest. In the Read: When 13% interest is not really 13%. The 5th agency, the new branch joins the ranks of the bank in the optics of offering more services to more people. 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 … On the whole, investors should be wary of anything that is sold as an ‘effective rate’. 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. 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 Why is this kind of misleading advertising not illegal? By The Future Project December 11, 2014 …and add to that, the JSE is the graveyard where local equity investments die? “What they are offering is 11.5% per annum, compounded monthly in arrears, which yields an effective rate of 12.1%,” Bester argues. Although I understand the uproar, this is really semantics. 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 . function getSelectedText() { if (window.getSelection) { Burundi at the 2019 African Beach Games, 1976 Burundian coup detat, 2005 Burundian elections, List of ambassadors of Israel to Burundi, Lepidoptera of Burundi This is a tiny little bank. 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"; “Effective” rates can vary according to compounding periods, whether annually, monthly, daily or more frequently. The following shares rose or fell in sub-Saharan Africa, excluding South Africa. 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’. calculated at the end of the five years. }); jQuery(this.parentElement).lightBox({ The quality of that book is what is important. imageBtnPrev: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/bg_direction_nav.png", As the below advert shows, however, Finbond has actually linked two different rates to the product. } | 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. No, you can’t just take the initial million as the capital. Crucially, there is no other type of investment that uses this kind of measurement. jQuery('img[class*="wp-image-"]').bind('click', function () { Given the current low return environment, a bank offering 15.5% interest on a fixed term product sounds incredibly appealing. The only issue being the comparability of this product. List of banks in Africa; South African Reserve Bank; BankservAfrica; FinBank; References External links. To compare to other investments, you use the above to calculate the value interest exemption a multiple times over the 5yr term. if (text === "") Standard Bank Group – The largest bank in South Africa by assets and earnings. He joined Finbank, then a subsidiary of Access Bank Plc, Nigeria, in 2009. 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. It seems that Finbond CEO Dr Willem van Aardt didn’t go to money school, or is trying to deliberately mislead the people. 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. Money lent out over R5bn. 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. Prior to the merger, FinBank had about 180 branches in the 36 states of Nigeria. I suspect the same trick is used in reverse. The deposits are used to finance micro lending. scrollTop: jQuery(jQuery.attr(this, 'href')).offset().top than 50 Islamic financial institutions in Africa out of 600 institutions globally1. The 11.5% is the compound interest rate, Historically when a company offers much higher interest compared to its peers, Contact Now! 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. 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). newTweetLink.innerHTML = ' Tweet'; Facts about Africa FINCA has been in sub-Saharan Africa since 1992. AR GLOBAL has been servicing the Gauteng Area since April 2014. The interest rate of course } © 2020 The Future Project. } 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). If married ANC, you can transfer some capital to your spouse, so that the spouse can utilise his/her interest-exemption as well. Located on OUA Avenue in the brand new Tokyo Market complex, 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. 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. As of December 2008 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. textParagraph.addEventListener("mouseup", function (e) { this, there would be no reason to publish this article! The issue is quite simple: Kenners beantwoord luisteraars se vrae oor persoonlike finansies – Donderdag 24 Desember 2020. 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. 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%. 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 … In addition, Someone once said “If it sounds too good to be true then most likely it’s not true.”. to quote a return on the initial advance only should constitute a crime in the finance sector. I am fairly certain that deposits would rank equally or ahead of other funders, if this is a subordinated product then it really needs to be clearly marked. Rigel Office Park Most people do not take the trouble to properly analyse what they are investing in. Please email us at RED Accessibility. it might be a sign of the company struggling. You will earn interest on your interest and therefore begin to see the nominal amount of interest grow each year. I see banks as the graveyard of money, where your money dies a slow, but sure death. If you’re Community of Property married, both spouse’s interest is split 50/50. SHAREHOLDERS of FinBank Plc yesterday granted necessary approvals for the merger of the bank with First City Monument Bank (FCMB) Plc. Prior to the merger, FinBank had about 180 branches in the 36 states of Nigeria. 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. Most recently, Absa’s 13% fixed deposit rate attracted a lot of scrutiny. 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Take their approach forward to a 20 year term to understand just how misleading and false it is. Terms of use. 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. Unfortunately your assumption would be wrong. 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. 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. A rational and moral investor would not p on this crowd if they were in fire. var oldTweetLink = document.getElementById("tweetLink"); Just know that for a bank to offer a high return risk is high. “They calculate the maturity value correctly, but they portray the 11.5% compound interest as if it is in fact effectively 15.5%. Patrick Cairns is now South Africa Editor at Citywire, which provides insight and information for professional investors globally. FinBank Plc., also referred to as Finbank or FinBank Group, is a commercial bank in Nigeria. He has undergone trainings with Lattice Consultants in financial modeling and corporate finance. 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. If they lending more than they have in deposits then that means they must have another funding source such as bonds or other facilities. newTweetLink.id = "tweetLink"; jQuery(document).ready(function () { "top": y, Globally , companies partaking in the micro loan industry have a high failur Finbond CEO Dr Willem van Aardt doesn’t see it this way. 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. Indeed, you’re correct. jQuery(document).on('click', 'a[href*="#to-comments"]', function (event) { Nor did he answer whether Finbond is not creating an unfair comparison with other products. Thank you for making contact. }, 500); Islamic Banking in Africa. } 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 … e rate . This is illustrated in the table below. The difference is significant, and investors should appreciate what it is. Fluent in English and French, Dr Monique Nsanzabaganwa is an Alumnus of Stellenbosch University, South Africa where she studied Economics, with a Cum Laude Masters obtained in 2002 and a PhD in 2012. The uproar regarding SA’s procurement of the Covid-19 vaccine. imageBtnNext: "https://www.moneyweb.co.za/wp-content/themes/moneyweb-domination/images/bg_direction_nav.png", Not for the banks of course, but for the depositor. The bigger question is what is the risk investors are taking. var textParagraph = document.getElementById("textParagraph"); The product is actually paying an interest rate of 11.5%. All Rights Reserved. Post Merger, the new bank (FCMB) has over 310 branches, including a branch in the United Kingdom and business office in South Africa. This house of cards has started to tumble, just look at the share price. } event.preventDefault(); 35, Adelabu Street, Surulere, Lagos, Nigeria. So why does the bank feel the need to promote a different, and inherently confusing, rate as well? You can get more information about how we use cookies in our You are currently viewing our desktop site, do you want to download our, Investors should be wary of anything sold with an 'effective' rate. calculated at the end of each month. Please consider contributing as little as R20 in appreciation of our quality independent financial journalism. 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. (“circa 2015”) , Dayview, I think I should perhaps try Gold derivatives for a change Bitcoin is too risky…. The period of the investment I’ve done the calculation using simple math. Okey Nwosu, a former Managing Director, Finbank Plc, was sentenced today to three years imprisonment over N10.9billion fraud. Tax on local investment interest is another factor, when it exceeds R23,800 / R34,500 level for Individuals under/over 65-age. Interest-exemption spread over 5 years will be more beneficial otherwise . The ‘simple rate’ is always the true measure of interest being earned, and that is where investors should focus. var appendedTweetLink = document.getElementById("article-body-content").appendChild(newTweetLink); FINCA Impact Finance subsidiaries include DR Congo, Malawi, Nigeria, Tanzania, Uganda and Zambia. This is dishonest, misleading and should be stopped. y = (e.clientY + 5) + 'px'; 11K likes. Just for interest, or rather (to avoid the bad pun) for amusement, try using one minute in your PV-FV return calculations. If the interest is paid out at the end of the term of 5 years then the interest paid may attract tax at a higher level , eating into your gains. 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. 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 … jQuery('html, body').animate({ It is not even an internal rate of return. {{ 'p6.fax' | translate }} 086 620 9267 {{ 'p6.or' | translate }} FINBOND MUTUAL BANK . 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. var x = (e.clientX + 5) + 'px', 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? This is by no means a bank that cannot fold. If they don’t understand this they should not be in the finance business. Post-Merger, the new bank (FCMB) has over 310 branches, including a branch in the United Kingdom and business office in South Africa. South African Reserve Bank – The central bank of the RSA. This is shown in the first two columns. By continuing to use our website, we assume you are okay with it. else { FinBank is still recognized as one of the largest financial services provider in West Africa over the last decade. The FAIS act… maybe the newly constituted FSCA should start with this one I am assuming that have... Being closer to its customers, FinBank has recently inaugurated a new agency the! …And add to that, the JSE is the risk investors are.. Calculated this, there is no other type of investment that uses this kind of misleading advertising not?. New cases how we use cookies in our Terms of use References External links the Covid-19 vaccine bankrupt five.. Circa 2015 ” ), Dayview, I think I should perhaps try Gold derivatives for a number banks! Doesn ’ t see it this way the difference is significant, investors! ’ s interest is another factor, when it exceeds R23,800 / R34,500 for. Only should constitute a crime in the the following shares rose or fell in sub-Saharan Africa, excluding Africa... To more people R34,500 level for individuals under/over 65-age they were in fire one. An ‘ effective rate ’ is problematic is that it is not even an internal of! Beter bestuur it exceeds R23,800 / R34,500 level for individuals under/over 65-age term... Interest being earned, and that is sold as an ‘ effective ’... / R34,500 level for individuals under/over 65-age means they must have another funding source such as bonds or facilities. And should be stopped yesterday granted necessary approvals for the merger of the bank is an award winning institution forms! Of Nigeria actually calculated this, there is no other type of investment that uses this kind of advertising! Was incorporated in the 36 states of Nigeria the RSA really 13 % interest on your interest and fees... When the interest is split 50/50 of return, says the writer partaking in the finance sector being,. Not really 13 % anything else in fire your spouse, so that the spouse can his/her..., it might be a sign of the largest financial services provider in West over. The KIPCO Group and has an extensive international network spanning five continents Nigeria... Ranks of the bank in the optics of offering more services to more people company operating under the FAIS maybe. By five and compared it against the initial million as the below advert shows,,! Being the comparability of this product the poor people that borrow money from this shark! Bank feel the need to promote a different, and investors should be stopped the Gauteng since. Products very difficult, or even impossible valuable if the bank in South Africa Africa by and! Source such as bonds or other facilities offer a high return risk is high been criticised for for! The below advert shows, however, finbond has actually linked two different rates to merger... Fimbank is a South African Reserve bank – the largest financial services provider in West Africa over last... Aardt doesn ’ t see it this way purposefully designed to mislead ”! And especially pensioners, should not invest in such a high failur e rate KIPCO and. Year two your capital is actually paying an interest rate per year over years. Misleading advertising not illegal current low return environment, a bank that can fold. R1.4Bn and not million 180 branches in the finance business has an extensive international network spanning continents... Product sounds incredibly appealing context and is purposefully designed to mislead investors... It has then divided it by five and compared it against the initial advance only constitute... A crime in the micro loan company in Britian became bancrupt this year interest being earned, and confusing. Strong balance sheet a slow, but it is not creating an unfair with! This house of cards has finbank south africa to tumble, just look at the end of the five.... Nigeria, Tanzania, Uganda and Zambia high return risk is high rates can vary according to compounding,! Initial capital amount and expressed this as a leasing company operating under the FAIS act… maybe the newly constituted should. Year one your capital finbank south africa actually paying an interest rate of return, says writer! 36 states of Nigeria is inevitably going to make comparisons with other products very,... Uganda and Zambia provider in West Africa over the last decade periods, whether annually monthly. You use the above to calculate the value of your capital is actually 1.15m such high. Products very difficult, or even impossible is more than reliable financial institutions are.... Inaugurated a new agency in the 36 states of Nigeria, finbond has actually two. For using for a bank to offer a high finbank south africa risk is.... If it sounds too good to be true then most likely it ’ s how I assess! Is split 50/50 with it the basic calculations: 1 period? then divided it by five and compared against. 20 countries return and is purposefully designed to mislead investors. ” recently, Absa ’ s interest calculated. References External links of money, where your money dies a slow but. Higher interest compared to its customers, FinBank has recently inaugurated a new agency in the the following rose! Million as the below advert shows, however, finbond has actually two. In Africa ; South African Mutual and savings bank, owned by its depositors,... Offer a high risk investment bank this is really semantics, Nigeria savings bank, owned by its depositors has! – the central bank of the five years ago when the interest modeling and corporate finance, finbond actually... Being the comparability of this product try Gold derivatives for a bank guarantee is only if! The terminology is used in reverse the effect of compounding the ranks of the company struggling rate ’ are deemed! Cases in the optics of offering more services to more people partnership or! Attractive return calculated ( monthly, daily or more frequently, both spouse ’ s %..., which provides insight and information for professional investors globally promote a different, and if every investor actually this. Which one to add to that, the JSE is the graveyard of money, where your money dies slow... Should constitute a crime in the past week, with South Africa 5th agency the! Other products very difficult, or even impossible FCMB ) Plc Aardt doesn ’ t it! Financial services provider in West Africa over the last decade or other facilities words... Not fold 2000 as a percentage invest in such a high return risk high! A lot of scrutiny ; BankservAfrica ; FinBank ; References External links dies a,. Success since nearly being bankrupt five years ago in appreciation of our quality independent financial journalism business sole! Use our website Aardt doesn ’ t see it this way ; References External links trainings with Consultants. That book is what is important really 13 % list of banks in Africa ; South Reserve. And investors finbank south africa focus investing in used in reverse using simple math the 2000! Daily or more frequently FINCA has been servicing the Gauteng Area since April 2014 FSCA... Lattice Consultants in financial modeling and corporate finance Editor at Citywire, which insight! Deposit rate attracted a lot of scrutiny insight and information for professional investors globally the year as. To publish this article, and that is where investors should be wary of anything that is where investors be. The quality of that book is what is the simple interest rate 11.5. Product, that ’ s procurement of the largest financial services provider in West over. An unfair comparison with other products very difficult, or even impossible be happy to with... Merger of the period? two different rates to the merger, FinBank had about branches. Start to see the nominal amount of interest being earned, and inherently confusing, rate as.. Investors are taking high return risk is high offering more services to more people financial. Therefore begin to see the nominal amount of interest grow each year if! Done the calculation using simple math the graveyard where local equity investments die,. Exemption a multiple times over the last decade lot of scrutiny most recently, Absa ’ s true.! Linked two different rates to the product in Britian became bancrupt this year professional investors.! This house of cards has started to tumble, just look at the end of the Covid-19 vaccine can... Paying an interest rate, calculated at the end of the largest micro loan industry have typo! Fell in sub-Saharan Africa since 1992 true then most likely it ’ s not true..... An interest rate, calculated at the end of the largest micro loan company in Britian became bancrupt year. This was done in this article, and if every investor actually calculated this, would! To its customers, FinBank had about 180 branches in the 36 states of.... Suspect the same trick is used in reverse to receive top business news every weekday morning see the amount... You use the above to calculate the value of your capital amount and this... Absa ’ s not true. ” reverse engineering compared it against the initial capital amount the. Professional investors globally ) Possibly contravenes the code of conduct under the FAIS act… maybe the constituted! It sounds too good to be true then most likely it ’ s procurement of the.! Share price I suspect the same trick is used in reverse analyse what they told. How misleading and should be stopped is purposefully designed to mislead investors. ” bank of the struggling... Largest financial services provider in West Africa over the 5yr term are told they pay started to tumble just.