Sasfin Interim Results to 31st December 2010
Wednesday, 2nd March 2011
Sasfin banking group has done well to grow its total assets by 18% to R4,1bn and its lending book by 23% to R2,4bn in what has been characterized as a "sluggish" banking environment in the six months ended 31st December 2010.
This, notes CEO Roland Sassoon, was "against the trend" as most other banking groups have been reporting patchy to weak credit demand from potential borrowers.
In addition, credit impairment losses continued to decline – the annualised credit loss ratio decreased to 1.6% on average loans and advances from 2.1% in 2009 – which is an indication of the improving credit environment. The declining trend in the credit impairment loss ratio, he says, looks set to continue into the second half of the financial year.
Notwithstanding growth in loans and advances of 20%, the total value of non-performing loans and advances declined marginally from the previous year of R168m to R160m. Headline earnings were up 10% on the previous comparable period to R53m but Headline Earnings Per Share were flat at 163 cents a share. An interim dividend of 49 cents a share has been declared (2009: 46 cents).
Sassoon says the group took a conscious decision to grow its lending book, but he reiterates that this has not been at the expense of its quality. "We have been very selective about the quality of the lending business we have taken on." Further, he believes that the bank will continue with its growth in loans and advances.
A highlight for the period was the strong performance of the business banking division, where the majority of the bank’s lending is done, which contributed some R34m to the bank’s R61m profit and around 50% of its segmented revenue. On the other hand, income from the non-asset areas of the business was down and the bank will be focusing its attention on reversing this trend.
Cost-to-income ratio remains high, although our cost base is stablising showing only an inflationary increase of 5% following the heavy investment in infrastructure, including IT systems and recruitment in prior years. The expectation is that these will flatten out in the next financial year as all the Group’s revenue levels start increasing and we obtain scale..
"We have concentrated on growing our lending book and we have built a solid platform for future growth, but from now on we will be putting more emphasis on the non-interest fee income side of our business and on managing our costs down. We have already taken some steps to contain our costs and we believe the benefits of this will flow through during the next financial year."
Looking ahead, Sassoon says that the combination of the group’s contained overheads, reduced credit losses and increased business activity across the bank’s full spectrum of operations will have a positive impact on the business.
He says that the economy is beginning to show signs of recovery, but there were still some "dark clouds ahead," mainly in the form of rising commodity and food prices and the impact that this will have on inflation.
For more information please contact Roland Sassoon, CEO of Sasfin Holdings Limited.
Office: 011 809 7778
Cell: 083 417 1100