SHARES in Sasfin leapt nearly 9 percent in midday trade on the JSE as the financial services group returned to profitability, boosting its annual headline earnings 190 percent, thanks to its efforts to streamline the group.
The improvement also came against the background of the global and South African economy performing better than anticipated, it said.
For the year ended June 30, Sasfin saw its headline earnings increase to R141.1 million from a loss of R48.62m the prior year, largely due to improved credit performance and an increase in total income of 11.65 percent to R1.3 billion. Group profit was R77.6 million from a loss of R43.2m the prior year.
The group, which is relocating its offices to 140 West Street, Sandton, soon, posted an ordinary share cash dividend for the reporting period of 131.02 cents per share from a withheld dividend the prior year. Return on equity improved to 9.11 percent form -3.12 percent.
Sasfin’s chief executive, Michael Sassoon, said yesterday that the focus was on growing the three core areas of the business - asset finance, wealth as well as its commercial and business banking segment.
Sasfin would consider acquisitions opportunities, particularly fintech, that would scale these core areas.
He also said that, despite the Covid-19 uncertainty in South Africa, he had been pleasantly surprised by the resilience of Safin’s clients. Although there had been an increase in non-performing loans last year, clients were now bringing the amounts owed up to date, especially over the past six months.
“This bodes well for the economy,” he said.
However, Sasfin warned that the economy remained fragile, and the full impact of the third Covid-19 wave and recent civil unrest remained to be seen.
“New strains of the coronavirus and the relatively low vaccination rates are a concern,” it said.
The group yesterday bid farewell to chairperson Roy Andersen, who would be retiring at its upcoming annual general meeting, and would be replaced by Deon de Kock.
Total assets declined 13.22 percent to R12.155bn as the group decided during Covid-19 to reduce funding obtained under repurchase agreements. Net available cash dropped marginally by 0.21 percent to R2.35bn.
It said the the profile of its book had improved over the year, with up-to-date loans at 84.99 percent from 81.68 percent last year. Its overdue loans were at 6.2 percent from 8.06 percent, while it reduced non-performing loans to 8.81 percent of total book from 10.26 percent.
Asset Finance achieving an operating profit of R289.3m from R68.9m, while B\\YOND Business Banking, its digital business banking franchise, saw 3 000 new business accounts opened during the year as the business grew transactional deposits by 45 percent and grew total income by 6.17 percent.
Sasfin Capital posted an operating loss of R4.6m from a R62.8m loss. Meanwhile, Sasfin Wealth increased operating profit to R77.5m from R65.1m.
During the year, Sasfin concluded several deals to streamline the legal structure and optimise the capital of the group, which were expected to enhance its future earnings.
Sasfin Wealth sold its 21.1 percent interest in Efficient Group for R146.2m, resulting in a post-tax profit of R12.2m.
Sasfin said it had also closed its Hong Kong operation, Sasfin Asia. The foreign trade finance operations were moved to South Africa, releasing $12m (R175m) of capital to Sasfin Bank. A once-off cost of R30m was incurred, as a result of the unwinding of the hedging and foreign currency translation reserves.
Sasfin also sold 100 percent of Sasfin Commercial Solutions, enabling the group to reallocate R30m worth of capital.
The group said it had also impaired intangible assets of R40.6m, some of which related to the sunsetting of legacy systems.
The repurchase of its preference shares became unconditional during the year, resulting in a liability to the preference shareholders of R144.7m at year-end, and this transaction would result in an uplift in regulatory capital and shareholders’ equity in 2022.
The Sasfin share incentive trust purchased 1 424 035 Sasfin shares for R40.1m in anticipation of a share incentive scheme, which was being designed to align executives’ interests to those of the group’s shareholders.
Looking ahead, the group said it saw further opportunities to consolidate the business and eliminate inefficient structures, including exiting the legacy private equity portfolio.
“As we sunset old systems and move our business onto cloud-based platforms, there should be additional efficiencies to be gained into the future. This remains a major focus of the executive team,” it said.
The company planned to strengthen its credit-led business banking proposition.
“We are ready to take the next step in the journey of building a comprehensive business banking offering. Our credit product range has been broadened and now includes revolving credit facilities and term loans in addition to property loans and trade and debtor finance.
“We have integrated banking, credit, and foreign exchange for the benefit of our clients and our digital suite continues to evolve. Our offering focuses on both small and large businesses.
“We have built a comprehensive digital offering where clients are able to have their full business banking requirements met with no human touch.
“At the same time, we are growing a team of seasoned business and commercial bankers, as well as specialist transactors, to deliver meaningful value to business clients who are so often neglected by the banking industry,” it said.
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