Sasfin on Tuesday (17 September), reported a 31% increase in headline earnings per ordinary share for the year ended June 2019, to 501 cents per share.
The financial services firm posted a 32.05% growth in headline earnings to R161.3 million, however, dividends per ordinary share declined 33.97%, to 99.88 cents, from 151.26 cents previously.
Group financial director, Angela Pillay, said that the growth in the earnings is primarily due to an improved credit loss ratio to 102bps (June 2018: 197bps). Total income grew by 2.21% to R1.246 billion with an improvement in the quality of earnings.
Income in the banking pillar grew by 8.87% and income (including from associates) in Sasfin Wealth grew by 11.23%. Performance was also aided by a normalisation of the tax expense, it said.
Sasfin chief executive officer, Michael Sassoon said: “This was a year of concentrating on the fundamentals of our business, in particular improved credit quality. Where possible, we narrowed the scope of responsibility for executives to enhance accountability.”
“Following the management changes in 2018, significant attention was given to defining, and delivering value to our key client segments. Sasfin is well positioned to grow within these segments through focus on distribution.”
The results, Sasfin said, follow a period of challenging credit performance and regulatory changes in 2017 and 2018 resulting in the board and management spending considerable time enhancing the
group’s credit approach and control environment.
Much progress was made in this regard in 2019 as evidenced by the improved credit loss ratio, it said.
Total assets grew by 1.97% to R14.601 billion and gross loans and advances remained largely flat at R7.9 billion. Since the half year, loans and advances grew by 5.8% following the declined in the first half of the year due primarily to the anticipated amortisation of the ATFS book, the company said.
The group said its funding base grew to R10.85 billion with growth of 11.96% in total deposits to R4.98 billion. “Our cash and cash equivalents improved to R4.39 billion. The maturity profile of the funding base was lengthened to meet the regulatory requirements,” it said.
Sasfin said that while management was pleased with the progress during the year, the poor state of the South African economy remains a concern.
“We continue to invest in emerging businesses, including upgrading our digital business banking platform B\\YOND, which will incorporate digitally enabled forex, small business loans and a mobile app in the near future. B\\YOND contributed to our R500 million growth in deposits,” Sasfin said.
The group launched B\\YOND, its digital banking platform, in the first quarter of last year.
“We think we have a leading digital banking platform,” said Sassoon. We want a digital bank that talks to businesses. The platform was built to benefit business.”
Sassoon said that the company will start a trial to select customers in the coming weeks. We will then roll-out digital loans to businesses. We think we are very well positioned compared to the new peers, as well as traditional banks,” he said.
The chief executive said that despite a meaningful investment into B\\YOND, the scale and customer numbers required to break even is not substantial.
The banking pillar showed an increase in headline earnings by 95.5% to R110.4 million due to an 8.9% growth in income and a 39.60% improvement in impairment charges. Asset finance was a significant contributor to group profitability and added focus is being given to this division to unlock further opportunities, Sasfin said.
The wealth pillar’s headline earnings increased by 28.80% to R40.35 million mainly due to increased foreign income, institutional asset management fees and income from strategic investments. This growth was offset by challenging local equity markets and lower brokerage volumes, the group said.
“We have emerged stronger after a period of change in our management team as well as our investment in technology, credit management and governance given the changing market conditions, banking and regulatory landscape,” said Sassoon.
“Our primary aim for 2020 is to ensure that our distribution engine is working optimally. Each of our businesses can grow meaningfully by acquiring a small percentage of market share within their target client segments.” he said.