Massive loss for Sasfin

 ·22 Oct 2024

Sasfin has recorded a significant loss ahead of the group’s proposed delisting from the Johannesburg Stock Exchange (JSE).

In its delayed financial results for the year ended 30 June 2024 (FY24), Sasfin Holdings Limited posted a headline loss of R58.68 million in 2024, compared to a profit of R112.68 million in FY23.

Headline earnings per share decreased from 366.18 cents to a loss of 190.96 cents per share.

“The loss was impacted by an increase in expected credit losses and a decline in non-interest income, driven by negative fair value adjustments in the Private Equity portfolio and a provision raised in respect of the administrative sanctions received,” said the group.

“The exiting of non-core activities also negatively impacted total income, while core operating costs remained flat.”

It said its previously announced strategic result has strengthened its balance sheet, enabling it to navigate the risks faced by the group.

The strategic reset, which was announced in 2023, includes, among other things, selling its Specialised Finance and Commercial Solutions businesses.

The group also sells its Capital Equipment Finance and Commercial Property Finance businesses to African Bank for over R3 billion.

Due to the strategic reset and other risks faced by the group, once-off costs were incurred, and short-term lost revenue opportunities contributed to the loss.

The group said that in due course, in terms of the strategic reset, costs are expected to reduce.

The group said that its core businesses, Wealth and Rental Finance, continued to perform well.

At the same time, increased losses were incurred in the Business and Commercial Banking (BCB) business, which it intends to exit by the end of 2025.

“While earnings are likely to remain under pressure in the coming financial year, the expectation is that, thereafter, the Group will be better positioned to generate healthy returns, supported by the fundamental strengths of its core businesses,” said the group.

Amidst the loss experienced by the group, it did not declare a dividend.

FinancialsFY23FY24% Change
Group Headline earnings (Rm)112.683-58.678-152%
Group Headline earning per share (cents)366.18-190.96-152%
Earnings per share (cents)353.65-195.57-155%
Group loss / profit (Rm)108.8-60.10-155%
Credit loss ratio (bps)11716541%
Dividend per share (cents)

The group previously announced that it plans to delist from the JSE.

“Following the proposed delisting, the group will continue its strategic reset by divesting from non-core
activities, including BCB,” said the group.

“This business has built strong capabilities over the years, holding significant inherent value with the potential to thrive in a different environment.

“This strategy will enable us to focus on our core Wealth and Rental Finance businesses. Significant progress has been made by exiting non-core activities and navigating challenges, positioning us well to execute the remaining strategy in the months ahead.”

The group has been dealt heavy legal blows over the last few months.

South African Reserve Bank’s Prudential Authority (PA) slapped Sasfin Bank with a R210 million fine (R49 million of which was suspended) due to failures to comply with the Banks Act, Financial Sector Regulation Act, and the Financial Intelligence Centre Act.

A further notice of potential action from the SARB concerning alleged contraventions by former staff of and clients of the discontinued Forex business was also issued.

The group also received a civil summons from the South African Revenue Service (SARS) for R4.9 billion, plus interest and costs, in the form of a damages claim linked to the discontinued Forex business.

“In relation to the SARS summons, Sasfin Bank obtained a legal opinion from ENS, authored by Professor Dale Hutchinson, Professor Michael Katz and Aslam Moosajee, and endorsed by Adv. Wim Trengove S.C (Legal Opinion)”

“The Legal Opinion unequivocally concludes that the claim falls outside the recognised parameters of applicable law and has a remote likelihood of success.”


Read: R2,028 per month double-blow to households in South Africa – and it gets worse



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