17 Mar 2016
Despite tough economic and market conditions, Sasfin Holdings Limited has produced pleasing results for the six months ended 31 December 2015. Sasfin delivered a 31% increase in headline earnings per share to 334.43 cents (2014: 255.33 cents) for the six-month period.
Total assets grew by 17% to R10.754 billion over the corresponding period, driven by a 36% growth in gross loans and advances to R5.935 billion (2014: R4.357 billion), which includes the acquisition of equipment rental company, Fintech.
The Group strengthened its financial position by growing its funding base by 23% to R7.316 billion (2014: R5.928 billion) underpinned by a 16% growth in deposits from customers to R3.459 billion (2014: R2.979 billion).
Chief Executive, Roland Sassoon, says that “improved performances in Wealth and Business Banking, including the contribution of Fintech’s performance, saw headline earnings climb to R106.137 million from R81.033 million at December 2014.”
Net interest income grew by 37% year on year underpinned by a 36% growth in the lending book and improved returns achieved on the surplus liquidity position.
Year-on-year, the operating costs of the Group, including Fintech, increased by 17% to R403.928 million (2014: R345.248 million). Staff costs increased by 21%, due to the inclusion of the Fintech staff complement and an increase in the Transactional Banking unit’s staff complement. Other operating costs grew by 12% due to increased investment in information technology and infrastructure.
The performance of key divisions improved, with performance areas per division as follows:
Business Banking delivered a profit of R86.243 million (2014: R47.650 million), an 81% increase over 2014, after accounting for Fintech and a lower net credit impairment charge. Notwithstanding the weak credit environment and growth in the lending book, the Business Banking credit loss ratio improved to 52bps from 98bps at December 2014, benefiting from improved bad debt recoveries.
Wealth showed a 6% increase in profitability to R35.058 million from R32.965 million at December 2014. Excluding certain once-off gains recorded in 2014, this division delivered a 43% growth in profitability on a normalised basis. The increased profitability was driven by strong performance across all Wealth business units, underpinned by a 26% increase in assets under advisement and management to R112 billion (2014: R89 billion).
Transactional Banking, now operational, and Treasury continued to grow by building a deposit base with diversified tenors. However, profitability declined to R4.033 million (2014: R7.886 million), as a result of a loss in the formative Transactional Banking unit. Deposits from customers grew by 16% to R3.459 billion (2014: R2.979 billion).
Capital incurred a loss of R4.853 million (2014: Profit of R6.448 million) for the period largely due to write-downs in Property Private Equity. The Private Equity unit achieved satisfactory results with reasonable returns on its portfolio.
Commercial Solutions was impacted by the economic downturn and endured tough trading conditions to December 2015, particularly in its Freight business. Profitability declined by 3% to R12.3 million from R12.7 million at December 2014. On a positive note, Sasfin Forex has performed well following the renewed management focus, attention to chosen markets and clientele, coupled with increased volumes traded during the period.
The Group’s funding position remained sound with a diversified funding base of R7.316 billion, up from R5.928 billion at December 2014, allowing Sasfin Bank Limited to maintain its liquidity coverage and net stable funding ratios at comfortable levels, well in excess of the regulatory minimums.
Sasfin’s securitisation vehicle, the South African Securitisation Programme (RF) Limited (SASP), Series 1, a leader in its market, continued to deliver consistent performance with R332 million of maturing notes successfully refinanced.
The Group’s capital adequacy ratio has decreased to 22% (2014: 24%), primarily due to growth in risk-weighted assets. “Sasfin’s Tier 1 capital base allows sufficient capacity for organic and acquisitive growth,” says Sassoon.
Sassoon says that Sasfin has laid the foundation for sustainable growth in its specialised Wealth and Business Banking and Financial Services offerings. Despite the weak state of the South African economy, Sassoon says that he is confident that Sasfin will continue to increase its market share in the Business Banking and Wealth markets, where it is experiencing good demand. The Group continues to build scale and enhance efficiencies through its ongoing investment in technology and infrastructure.
Issued on: 17 March, 2016
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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 wide range of complementary banking, financial and related services.