Sasfin posted a 32.05% growth in headline earnings to R161.305 million (June 2018: R122.152 million) with an increase in headline earnings per share of 31.42% to 501.00 cents (June 2018: 381.21 cents) for the year ended 30 June 2019.
According to Group Financial Director, Angela Pillay, the growth in the earnings is primarily due to an improved credit loss ratio to 102bps (June 2018: 197bps). Total income grew by 2.21% to R1.246 billion with an improvement in the quality of earnings. Income in the Banking Pillar grew by 8.87% and income (including from associates) in Sasfin Wealth grew by 11.23%. Performance was also aided by a normalisation of the tax expense.
Sasfin CEO Michael Sassoon says: “This was a year of concentrating on the fundamentals of our business, in particular improved credit quality. Where possible, we narrowed the scope of responsibility for executives to enhance accountability.”
“Following the management changes in 2018, significant attention was given to defining, and delivering value to our key client segments. Sasfin is well positioned to grow within these segments through focus on distribution,” Sassoon adds.
The results follow a period of challenging credit performance and regulatory changes in 2017 and 2018 resulting in the Board and management spending considerable time enhancing the Group’s credit approach and control environment. Much progress was made in this regard in 2019 as evidenced by the improved credit loss ratio.
Total assets grew by 1.97% to R14.601 billion and gross loans and advances remained largely flat at R7.889 billion. Since the half year, Loans and advances grew by 5.8% following the declined in the first half of the year due primarily to the anticipated amortisation of the ATFS book.
The Group’s funding base grew to R10.845 billion with growth of 11.96% in total deposits to R4.981 billion. Our cash and cash equivalents improved to R4.390 billion. The maturity profile of the funding base was lengthened to meet the regulatory requirements.
Challenging Macro Environment
While management was pleased with the progress during the year, the poor state of the South African economy remains a concern. Many South African business remain under pressure, however we have been able to finance carefully selected good quality growth businesses.
We continue to invest in emerging businesses, including upgrading our digital business banking platform B\YOND, which will incorporate digitally enabled forex, small business loans and a mobile app in the near future. B\YOND contributed to our R500 million growth in deposits.
The Banking Pillar showed an increase in headline earnings by 95.51% to R110.391 million due to an 8.87% growth in income and a 39.60% improvement in impairment charges. Asset Finance was a significant contributor to Group profitability and added focus is being given to this division to unlock further opportunities.
The Wealth Pillar’s headline earnings increased by 28.80% to R40.350 million mainly due to increased foreign income, institutional asset management fees and income from strategic investments. This growth was offset by challenging local equity markets and lower brokerage volumes. Sasfin Asset Managers, a level 1 B-BBEE boutique asset manager, won two Raging Bull awards for its Sasfin BCI Flexible Income Fund. Assets under management and advice increased by 3.67% to R41.1 billion.
The Capital Pillar delivered disappointing headline earnings for the year of R4.813 million. This performance was a result of lower mark-to-market valuations in Private Equity and reduced corporate advisory fees. The Group continues to take steps to enhance the quality of earnings in this Pillar.
Sasfin’s strong human capital, brand, diversified offering and solid balance sheet differentiate us from smaller peers and new entrants while our agile approach and personal touch differentiate us from larger peers.
According to Sassoon, “we have emerged stronger after a period of change in our management team as well as our investment in technology, credit management and governance given the changing market conditions, banking and regulatory landscape.”
“Our primary aim for 2020 is to ensure that our distribution engine is working optimally. Each of our businesses can grow meaningfully by acquiring a small percentage of market share within their target client segments.” he adds.