Sasfin posted a 5.67% increase in earnings per share for the half-year ended 31 December 2019. Headlines earnings for the six month is down 2.27% due to adjustments in the prior year which have not recurred in the current year.
According to Group Financial Director, Angela Pillay, the improved earnings is due to improvement in the impairment charge as a result of improved credit quality. The Group was impacted by poor performance in direct Private Equity, but the core operations delivered pleasing results.
Growing Deposit, Funding and Asset Base
Total assets grew by 6.86% to R14.527 billion with the Group credit loss ratio improving to 117bps (December 2018: 123bps). Total Funding grew by 4.97% year-on-year to R10.404 billion (R9.911 billion) largely driven off good deposit growth of 10.95%.
Sasfin Group CEO Michael Sassoon said that while many local SME’s were under pressure amid challenging economic conditions, Sasfin’s operating model had remained resilient during this period, primarily through its core lending to carefully selected, growth-orientated businesses.
“We are particularly pleased with the improved credit performance, growth in our deposit book and growth in assets under management. In this regard, we have been able to support South African businesses and investors during difficult trading conditions and at the same time, remain relevant in a highly competitive lending environment.”
Banking Pillar revenue increased 2.88% year-on-year in tough economic conditions. Profit after tax for the year increased 17.29% to R68.157 million (December 2018: R58.108 million as a result of the decrease in impairments by 31.13%.
Highlights include Asset Finance’s solid performance with an enhancement product mix rolled-out in the past six months. Additionally, there was a good performance from Trade and Debtor Finance after a challenging prior couple of years.
“We have continued to evolve our digital business banking platform, B\YOND and now offer digitally enabled business loans and an App. This together with the Hello Paisa relationship, which is performing well, has resulted in improved performance in Transactional Banking” says Sassoon.
The Wealth Pillar’s earnings remained largely flat with profit after tax of R25.721 million (December 2018: R25.780 million). A strong performance by Sasfin Asset Managers, which together with increased foreign income as well as income from Wealth’s strategic investments was offset by lower portfolio management fees and brokerage generated from local equity markets.
Assets under Management and Advice increased significantly year-on-year by 18.4% to R44.077 billion (December 2018: R37.219 billion) due largely to an increase in institutional flows (with institutional AUM now exceeding R11 billion) as well as an increase in offshore assets under management to over R11.6 billion (December 2018: R9.1 billion).
The Capital Pillar showed an increased loss after tax of R6.328 million (December 2018: R1.039 million) largely due to an increase in impairments in the Private Equity portfolio, which we are decreasing exposure to. The business has undertaken a strategic transformation by offering value-adding term debt facilities to property and private business. This strategy has begun to show positive signs with an increase in loans and advances for the Pillar by R290m.
Covid-19 is evolving rapidly and the impact on local and global markets is volatile, severe and uncertain. This is to be expected for some time. Our response is based on what we know today and the best assessment of the future. We have developed a five-point plan to manage the impact of the pandemic:
Our top priority is the health and safety of all our stakeholders, and we have taken significant hygiene and other steps to ensure same. Our thoughts and prayers are with those impacted by Covid-19. Secondly, we have remote working capabilities to ensure effective business continuity. Over the last two weeks we have tested most of these processes and by the end of this week we expect 50% of our staff to be working from home with all our services available.
Thirdly, we have appropriate capital, liquidity and funding buffers to deal with short to medium term shocks. We have adopted a dynamic risk management approach in order to maintain prudent buffers during this time. Fourthly, we are actively engaging with all our stakeholders including our employees, clients, suppliers, investors and regulators. Finally, we will do what we can, within sound business and governance principles to support our clients during this challenging time
“While our focus in recent days has turned to doing what we can to address Covid-19 which will result in a challenging second six months, we continue to shift out business to ensure growth and an improvement in earnings mix across the Group. This is evidenced by the steps taken in all our Pillars.
We have increased our global assets under management and continue to develop our institutional asset management offering (recent Raging Bull Award and Morningstar winner) in Sasfin Wealth. We continue to grow our deposit base off the back of our digital business banking platform and grow and enhance the quality and spread of our loans and advances in Sasfin Bank. Finally, we are reducing our exposure to direct Private Equity and have grown a strong lending franchise in Sasfin Capital,” says Sassoon.