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SASFIN Holdings did not escape the lag effect of the global recession on the South African economy, and on the banking sector in particular, even after it managed to hold its profit steady last year.

The specialist banking and financial services group's headline earnings fell by 27% to R48m in the six months to December last year due to reduced trading volumes, increased overheads and a higher level of bad debt.

CE Roland Sassoon said bad debts had started leveling off but the group was still proceeding cautiously, as the economy "is still fragile".

Growth would be supported by a firm capital base of more than R1bn in group equity, improved liquidity levels, and stronger operating infrastructure in terms of human capital, information technology systems and new headquarters.

In the half year, the International Finance Corporation (IFC) made a 30m commitment to Sasfin by way of two injections in Tiers 1 and 2 capital, and a trade finance guarantee facility of 10m for the group's business banking division.

Another feature of the half-year was the continued success of Sasfin's securitisation structure, which not only again refinanced its paper, but also securitised a further tranche of R58m, which was oversubscribed.

All Sasfin's divisions made a positive contribution to headline earnings, albeit at lower levels.

Headline earnings per share were 32% lower at 164c as a result of the dilution effect of the capital injection from the IFC. The credit loss ratio on average loans and advances rose to 2% from 1,2%.

Loans and advances were virtually unchanged at R1,9bn. Operating costs rose 14% to just under R220m.

On the balance sheet, cash and liquid assets increased 73% to R719m from R415m. Deposits from customers were up 2% to R955m. Property, plant and equipment rose sharply to R239,1m from R133,9m.

The banking business was hurt by lower business volumes.

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