Business lender Sasfin reports big drop in earnings
JSE-listed banking and wealth service provider Sasfin on Monday reported a big decline in earnings for the year ended June 2018, citing a challenging environment for the clients of its core credit businesses, “who are facing substantial pressures”.
The group posted a decline in headline earnings of 37% to R122 million, while headline earnings per share dropped by 38% to 381.21 cents per share (2017: 611.76 cents).
A 77% rise in impairments was on the back of a single large credit default and an increase in portfolio impairments, resulting in the profit before tax declining by 16.25% to R204 million, Sasfin said.
Total assets grew by 13% to R14.3 billion (2017: R12.7 billion) with gross loans and advances growing by 18%, largely off the back of the acquisition of the rental finance book of Absa Technology Finance Solutions (ATFS), effective 1 April 2018, for a total consideration of R1.2 billion, Sasfin said.
Funding grew by 15.37% to R10.352 billion (2017: R8.973 billion) which resulted in a healthy cash position of R1.892 billion.
“The global economy and markets continue to demonstrate robust growth largely off the back of developed markets and the US specifically. Emerging markets and currencies have come under increasing pressure over the last few months which has had a knock-on impact on the South African economy which is also facing a number of its own challenges.
“Specifically the increase in business and investor confidence post the ANC national conference was short-lived, with renewed concerns around the state of the economy which has gone into recession. Furthermore, policy uncertainty most notably with regards to private property rights, has further reduced investor confidence,” Safin said.
It noted that the banking pillar was impacted most significantly by the increased impairments and tax expense, resulting in a decrease in profit to R68.946 million (2017: R145 million).
The bank launched B\\Yond, its digital banking platform in 2018 and is currently engaged in further enhancements of this platform, “and we are starting to grow client numbers,” Sasfin said.
Sasfin said that the South African economy critically needs growing entrepreneurial businesses, adding that small to medium size businesses struggle to engage with banking and financial service providers in a way which works for their business.
It said that the economy also needs to grow a generation of investors and savers, at a time when the country’s savings rates are among the lowest in the world.
Looking ahead, Sasfin said it has developed a clear vision of how it will unlock growth, including enhancing its products, user-experience and innovation – “this is evident in our digital offerings including our novel B\\Yond banking platform and our acquired SWIP business”.
Sasfin has also targeted growth in offshore revenue – “we continue to grow foreign income within Sasfin Wealth which was strengthened by the investment in DMA, previously Saxo Capital Markets South Africa,” it said.
Read: Sasfin launches new banking platform aimed at small businesses
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