19 Mar 2019
Sasfin has posted a 59.89% growth in headline earnings to R80.531 million (December 2017: R50.367 million) with an increase in headline earnings per share of 58.75% to 250.12 cents (December 2017: 157.56 cents) for the six months ended 31 December 2018.
According to Group Financial Director, Angela Pillay, the growth in the unaudited results is primarily due to an improved credit loss ratio to 123bps (December 2017: 200bps) and a normalisation of the tax expense to R30.344 million (December 2017: R47.494 million). Total income grew by 5.78% in a subdued economy.
Sasfin CEO Michael Sassoon says: “Sasfin is starting to reap the fruits of the significant strategic steps it has taken over the last two years including strengthening the management team, enhancing our credit function and investing in technology.”
The Group has taken meaningful strides in terms of its three-pronged strategy in respect of innovation, namely to build, invest and collaborate. Specifically, the Group has upgraded its digital wealth and business banking platforms, SWIP (Sasfin Wealth Investment Platform) and B\\YOND as well as having concluded strategic deals with digital finance fintech Payabill and powering Hello Paisa’s new digital banking offering to the unbanked and under-served.
These and other investments in technology and people (including the acquisition of Absa Technology Finance Solutions (ATFS) saw costs grow by 12.31%. The Group’s cost-to-income ratio deteriorated to 73.96% (December 2017: 70.40%). Cost growth is expected to reduce by year end.
Funding grew by 7.80% to R9.911 billion which resulted in a healthy cash position of R1.113 billion, and near cash in the form of negotiable securities grew by 71.02% to R2.762 billion, to optimise the Group’s capital adequacy ratio (CAR) of 16.479% following the day-one impact of the IFRS 9 adjustment.
The Banking Pillar benefited most from the improved impairments, resulting in an increase in profit after tax to R58.108 million (December 2017: R35.644 million). The gross loans and advances book grew by 9.95% to R7.339 billion. This is due in part to the acquisition of the ATFS rental finance book and growth in capital equipment finance.
The Wealth Pillar showed an 8.31% growth in profit after tax to R25.780 million (December 2017: R23.801 million) largely due to increased foreign income (22.93%), institutional asset management fees and income from strategic investments.
The Capital Pillar showed an improved loss after tax of R1.039 million (December 2017: R3.494 million) largely due to an improved tax expense position resulting from the prior year once-off charge. This Pillar is expected to show better performance in the second six months.
“Sasfin has recovered well after the disappointing performance in the previous year. While the economy remains challenging, we are confident that we are continuously improving our offering to ensure that we deliver value to our primary client segments. Our future success will be underpinned by our ability to generate top line growth through growing our client base while stabilising costs and managing credit risk,” says Sassoon.
Post the period of reporting and in addition to the Group’s fintech successes, Sasfin Asset Managers (Pty) Ltd won two coveted Raging Bull Awards for its Flexible Income Fund and achieved a B-BBEE Level 1 status. “SAM’s B-BBEE status together with the recently announced deal with Hello Paisa, which we are very excited about, will drive critically needed financial inclusion underscores Sasfin’s overall commitment to transformation, one of the Group’s strategic focus areas,” says Sassoon.
He says that Sasfin will continue to enhance its value propositions and distribution capabilities to its five primary client segments – small business, medium business, asset suppliers, private clients and institutional clients. “This includes growing our fintech capabilities; incorporating credit and forex capabilities into our B\\YOND platform; ensuring cash flow support for medium sized businesses through asset finance; further growing clients’ global wealth and taking advantage of our strong position to grow institutional assets under management.”
Note: IFRS 9 Financial Instruments (IFRS 9) became effective for the Group from 1 July 2018. The Group has, as permitted by IFRS 9, elected not to restate its comparative financial statements. Therefore, the comparative financial information has been prepared on an IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) basis. The impact of adopting IFRS 9 has been applied retrospectively with an adjustment to the Group’s opening 1 July 2018 reserves.
Issued on: 19 March, 2019
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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 comprehensive range of specialist financial products for Bank, Capital and Wealth clients.