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Sasfin Group still on a growth trajectory

2012-03-07

Despite the global economic woes and depressed local economy, Sasfin Banking Group continued on its growth trajectory for the six months ended December 2011 raising total assets 28% to R5.3bn.

The group delivered total income for the period of R300m – up 10% from R273m for the comparable period last year. After tax profit for the period was R61m compared with R60m for the previous period and Earnings Per Share were flat at 163 cents a share.

Once again the strongest divisional performer in the group was the Business Banking division, which under its new head, Linda Frohlich, grew its loan books by some 15%. Loans and advances in the division have now reached R2.7bn. During the period under review, the division contributed R42.5m towards group earnings – 13% up on the previous period. 

Credit losses in the division decreased from 0.7% in 2010 to 0.6% while the annualized credit loss ratio for the Group decreased from 1.6% in 2010 to 1.2% on average loans and advances.

“We have certainly experienced good growth in the Business Banking division and we are hoping that will continue into the next half and beyond,’’ says CEO Roland Sassoon.

There are still some problem private and property equity investments in the Capital division, where earnings dropped R8.7m in the period. Earnings in the Treasury division, which is suffering the effects of a negative carry on its excess cash of R1,3bn came in R2.7m lower. Sassoon says that remedial action has been taken to resolve the legacy issues affecting these business units, including the downsizing of the private equity portfolio and the disposal of the Group’s property investments. Sasfin will have a 25% stake in the management company of the Annuity Property Fund, which should be listed next month. There have also been some changes in the management of the Corporate Finance operation where former JSE executive Noah Greenhill has now taken charge.

There have also been some recent management changes in the Wealth Management division, which Sassoon observes, is now beginning to experience good growth. Earnings from this division were 26% up on the previous period. “We continue to strengthen our local and global portfolio management and asset management capabilities in this division”, he says. “More generally, we want to grow the non-interest, fee side of our business as much as possible as we move forward.”

Further, he notes that the newly constituted Commercial Solutions division, which now includes the activities of Sasfin’s newly-acquired specialist business outsourcing subsidiary, IQuad, in addition to Sasfin’s freight and short term insurance activities, has performed well with earnings of R8.3m up from R3m in the prior period. Sassoon says this division synergises well with its Business Finance and International Treasury units.

Sassoon says that the radical steps that have been taken to uplift all divisions, which include increased investment in its brand, are starting to bear fruit, which should continue next year, when Sasfin hopes to be firing on all cylinders.

According to Sassoon the Group has also taken steps to strengthen its balance sheet. Earlier this year it acquired a R361m seven-year loan from European development funding agencies and now has cash on hand of some R1.3bn. It maintains a comfortable capital adequacy ratio of 29%, which is well above the regulatory requirements and Sasfin is well placed to achieve the liquidity requirements of Basel lll.