19 Sep 2016
Despite tough economic and weak market conditions, Sasfin Holdings Limited delivered a 29.0% increase in both headline earnings - to R232.080 million (2015: R179.864 million) - and headline earnings per share - to 731.27 cents for the year (2015: 566.74 cents).
The Group expanded and diversified its funding base resulting in a surplus liquidity position of R1.910 billion, albeit lower than the R2.618 billion in 2015. The decrease in surplus liquidity was utilised to fund the growth in loans and advances.
“Total income grew by 25.1% year-on-year driven by impressive revenue generation in the Business Banking and Wealth divisions,” says Group Chief Executive Roland Sassoon, however, “the weak credit environment and sluggish economy led to the Group credit loss ratio increasing to 108bps (2015: 77bps),” he continues.
Sassoon says that Group costs increased by 19.8% to R828.316 million (2015: R691.352 million) “due to the inclusion of the Fintech cost base combined with increased investment in Risk, Compliance and Information Technology”.
The performance of key divisions improved, with key performance areas per division as follows:
Business Banking delivered a solid set of results with profit for the year growing by 32.6% to R156.294 million, from R117.857 million in 2015. The key factors contributing to this performance were the strong revenue growth of 41.1% and the integration benefits arising from the Fintech acquisition. This was offset by a sharp increase in the divisional credit loss ratio to 101bps (2015: 70bps).
Transactional Banking and Treasury achieved a lower level of profitability for the year, impacted by further investment in the newly-launched Transactional Banking offering. The Transactional Banking unit is still in its formative phase and has experienced lower-than-expected client acquisition.
The Treasury unit continues to perform strongly with a stable deposit base of R3.207 billion underpinned by a competitive service and product offering.
The Capital division’s profitability increased by 60.3% to R20.344 million (2015: R12.691 million), largely due to the encouraging turnaround in the Corporate Finance unit. This was supported by a positive result in the Private Equity unit while losses were incurred on certain legacy Property Equity investments. The Corporate Finance unit is benefiting from the Investment Banking services it has started to provide.
The Wealth division’s profitability increased by 18.6% to R76.406 million (2015: R64.425 million) underpinned by increased distribution and enhanced system and operational capabilities which resulted in good performances across all Wealth units. Assets under administration decreased year-on-year, largely due to safe custody clients exiting their portfolios, while assets under management (including under advice) increased by 11%. Wealth acquired a 14.3% strategic investment in Efficient Group Limited, a listed wealth and asset manager with a view of exploring ways of collaboration.
Commercial Solutions’ profitability was positively impacted by the improved performance in Sasfin Forex, but was dragged down by the Freight and Incentives units due to the economic downturn and tough trading conditions. This led to a marginal increase in profitability to R24.865 million (2015: R23.106 million). Subsequent to year-end, the Group concluded the sale of 70% of its shares in Imperial Sasfin Logistics (Pty) Limited (formerly Sasfin Premier Logistics (Pty) Limited) to Imperial Group Limited and agreed to merge its short term insurance broking business with Holistic Risk Solutions (Pty) Limited, which will be housed in Sasfin’s 51% subsidiary, Sasfin HRS (PTY) LTD.
The Group should benefit from the economies of scale that these transactions are expected to achieve.
The Group’s deposit and funding base grew, with improved diversification, mix and maturity profile, to R7.303 billion, up from R6.892 billion at June 2015. This funding base has enabled Sasfin Bank
Limited to maintain its liquidity coverage ratio at comfortable levels and to support the growth in its lending activities.
Sasfin’s securitisation vehicle, South African Securitisation Programme (RF) Limited (SASP), a leader in its market, continued to deliver consistent performance. Maturing notes of R332 million were refinanced and R200 million of new notes were issued.
The Group’s total capital adequacy ratio decreased to 19.20% (2015: 20.86%) primarily due to a growth in risk weighted assets. Tier 1 capital adequacy, the main measure of capital strength, was 18.80% (2015: 20.41%). The Group’s capital and liquidity ratios are well above the current regulatory requirements.
Notwithstanding prevailing market uncertainty, volatility, and constrained economic growth, the Group remains geared for continued growth, aided by its capital and liquidity position, and high-touch service model.
“Sasfin will continue to strive for scale and diversity by applying its long-term strategy of catering for the banking and financial needs of the Business and Wealth markets,” says Sassoon.
Issued on: 19 September, 2016
For media queries, please contact:
Head: Marketing and Communications
Tel: (+27) (11) 809 7851
Cell: (+27) (82) 923 3214
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.