Sasfin sees its way clear in financial ‘fog’
SASFIN Holdings’ earnings have remained steady in a market where profits in the banking and financial services sectors have fallen in the face of rising bad debt and interest spreads in a contracting economy.
Headline earnings in the year to June 30 for the company, which focuses on the entrepreneurial corporate, business and private client markets, were virtually unchanged at R154m, equivalent to headline earnings per share of 560c — from R156m (576c) in the previous year. Dividends for the year fell to 220c per share from 228c last year.
CEO Roland Sassoon said yesterday a good foundation had been laid for growth in the past year through an increased capital base, the growing relationship with the International Finance Corporation , the new premises and IT systems, increasing brand awareness, and an opportunity to increase penetration in the small and medium enterprises market.
The management team had been expanded under one roof in the new R170m building in Johannesburg, he said.
Likening the impact of the global financial crisis on the group to suddenly driving into a dense fog, financial director Malcolm Segal said it had done the “responsible thing” by applying more conservative credit and investment policies, strengthening the capital base and reinforcing the infrastructure.
Group and bank capital adequacy rose to 31% from 28% and to 32% from 22%, respectively. Impairments rose to R18,8m from just over R4m, but the credit loss ratio of 1% was well below that of the banking sector.
Sassoon said the treasury had benefited at the expense of the lending, and lower deposits were compensated for by the securitisation operations. Deposits fell 20% to R881m — a reflection of the weaker economy.
In contrast to previous years, loans and advances were flat at R1,8bn — previously the book had grown 20% or more. Cash and liquid assets were 6% lower at R473m at year-end after liquidity had been held at comfortable levels throughout the year.
During the year to June, the banking division raised its contribution to group profit by R4m to R65,5m, while the contribution from the treasury division was 76% higher at just over R60m.
In securitisation, the group placed R900m at good rates, R700m on rolling existing notes and R200m from the issuance of new notes.
In business banking, a strong pipeline of business was evident. This was after the business finance unit’s book declined in the year due to a lower level of activity. At the equipment rental finance business unit, profits increased in spite of tough trading conditions.
In the private equity and property business unit, there had been a revival in demand as entrepreneurs focused on the future. An improved performance was expected from the corporate finance unit.
Wealth management was experiencing a “strong uptick” in trading volumes, while costs were being contained in the international freight and clearing operations. |