Sasfin Holdings Limited has produced pleasing results for the year ended 30 June 2015, despite the weak external operating environment. Headline earnings per share increased 16.5% to 566.7 cents (2014: 486 cents) and the Group significantly strengthened its balance sheet.
Following the acquisition of Fintech, total assets grew by 33% to R10.9 billion, driven largely by a 35% growth in gross loans and advances to R5.37 billion (2014: R3.98 billion).
CEO Roland Sassoon says that the Group has strengthened its financial position by expanding and diversifying its funding base, resulting in a healthy liquidity position of R2.6 billion (2014: R2.1 billion). “We have achieved the critical mass necessary to ensure pleasing growth and with over R10 billion in assets, we are now well positioned for future growth,” he said.
Strong revenue growth in Business Banking, Wealth and Treasury coupled with below-inflation cost growth saw headline earnings grow to R179.9 million.
Net interest income grew by 16%, underpinned by good growth achieved in the lending book and improved returns achieved on the surplus liquidity position
The Group’s credit-loss ratio improved to 77bps from 80bps in 2014 and the Group’s effective tax rate reduced from 23% to 18%, driven by certain income streams at lower tax rates and some exempt income.
Group costs reflect a 5% increase when compared to the same period in 2014, highlighting the Group's continuous efforts to contain cost growth. “The growth in staff costs is largely attributed to an increase in staff numbers in the Compliance department and the establishment of the new Transactional Banking division,” says Sassoon.
The Group's cost-to-income ratio showed a marginal improvement to 71% from 72% in 2014, while the Banking Group improved to 61% from 64% in 2014. Both the Group and Banking Group reported a positive JAWS ratio.
Key performance areas per division as follows:
The Business Banking division delivered a solid set of results, with profit for the year of R117.9 million (2014: R101.5 million), a 16% increase over 2014. The key factors were strong growth in loans and advances, margin retention and an improved credit performance. Notwithstanding the growth in the lending book, the credit loss ratio improved to 70bps from 85bps in 2014, while the ratio of non-performing loans to gross loans and advances remained flat at 3.9% year-on-year. As the acquisition of Fintech was effective on the last day of the financial year, when all the conditions precedent were fulfilled, these results do not include any profit contribution from Fintech.
The Wealth division delivered an impressive set of results with profit growth of 34% to R64.4 million (2014: R48.2 million) and funds under advisement and management growing to R117 billion (2014: R91 billion). The division expanded its local and global investment offering (including the launch of a Fixed Income Fund) and delivered excellent performance to its clients, as evidenced by Sasfin Asset Managers' third Raging Bull award. This unit is starting to reap the benefits of its investment in distribution, information technology and operations. The Institutional Fixed Income desk continued to show good growth in profitability.
The Treasury division, which has now been incorporated into the Group's Transactional Banking division, has grown its deposit base encouragingly to R3.3 billion at June 2015, an increase of 21% over 2014. The Transactional Banking business is fully operational, and as expected, is in a loss-making position during its start-up phase. The combined units achieved a profit of R10.4 million for the year (2014: R12.2 million), after the initial set-up costs of the Transactional Banking business.
The Capital division's performance showed a disappointing decrease in profitability year-on-year to R12.7 million from R14.4 million, largely due to a poor performance in Corporate Finance. While Private Equity achieved improved results, the Corporate Finance unit underwent a change of direction and leadership and is now more appropriately resourced given the change in strategy. Going forward, Sasfin Capital intends to service the mid-sized corporate market through a combination of select balance sheet deployment and strong corporate finance advice.
The Commercial Solutions division endured a tough trading environment, particularly in its Incentives and Logistics businesses, which achieved significantly lower levels of profitability compared to 2014. Sasfin's Forex unit, having achieved the necessary critical mass, achieved a R5.5 million turnaround in profit. This unit is well poised to become a strong profit contributor. Overall, the Commercial Solutions division made a profit of R23.1 million for the year, down from R35.3 million in 2014. Remedial steps have been taken in our Logistics unit that are expected to return it to good profit generation.
The Group's deposit and other sources of funding continued to grow, with an improved deposit mix and maturity profile. Overall, the Group's funding position remains strong with a diversified funding base of R6.892 billion, up from R5.381 billion of last year. This funding base has enabled Sasfin Bank Limited to maintain its liquidity coverage and net stable funding ratios at very comfortable levels, well in excess of the regulatory minimums.
The Group's capital adequacy ratio has decreased to 21% (2014: 23%), primarily due to the growth in risk-weighted assets. The Group remains well capitalised with a primary Tier I capital ratio of 20% (2014: 21%), which is the main measure of capital strength, and with both ratios well above the current regulatory requirements.
Sassoon emphasises that “Sasfin has a strong base for future growth and expansion. The launch of our Transactional Banking division allows us to become a primary banker to our clients and to further enhance our offerings in our chosen markets. I believe that our personalised approach to service differentiates us from our competitors and will serve us well in delivering on future growth prospects.”
Date issued: 9 September 2015
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Post: PO Box 95104, Grant Park 2051
Sasfin Holdings Limited (“Sasfin” or “the Group” or “the Company”) is a bank-controlling company listed in the “Financials: Investment Services” sector of the JSE Limited (“the JSE”). Sasfin and its subsidiaries provide a wide range of complementary banking, financial and related services.