Sasfin Holdings lifted headline earnings a share 23.6% in the year to June 30 after increased borrowings by businesses fuelled growth, leaving all the group’s key financial drivers strengthened, CEO Michael Sassoon said yesterday.
Headline earnings improved to R166.7 million for the year ended June 30, 2022, from R141.1m in 2021. The better earnings were mainly from improved credit performance and it enabled the raising of a cash dividend by 18.2 percent for the financial year to 154.85 cents per share.
Total income was flat due to divestment from non-core businesses. However, group profit improved sharply to R183.9m from R77.6m, following an 18.6% increase in loans and advances to R8.6bn.
“We weathered Covid well and we feel we are in a good position. This growth was achieved with lower credit losses, and the strong book growth should provide a good foundation for net-interest income returns in the year ahead,” Sassoon said in a telephone interview.
“We have seen increased demand for growth credit. The South African entrepreneurs, who we finance, are investing in growing their operations which is hopefully a good sign for the country during these volatile economic times. As a result, Sasfin achieved record loan growth for a single financial year,” he said.
Questioned about recent announcements by other banks and fintech’s to increase banking services to small- and medium sized business, Sassoon said these appeared to be mainly technology driven initiatives to smaller business clients, and they added to a more competitive market.
“We feel that if you perhaps need anything from a R10m to a R50m facility, and where we need to visit the client and adopt qualitative as well as quantitative risk judgements, and be their partner over the long term, we feel we have a very strong presence in this market,” he said.
Total assets increased 7.7% to R13.11bn, supported by growth in deposits from customers which grew 10.56% to R5.23bn.
“Our improved performance is due to identifying key markets where we can deliver value and then strengthening the distribution efforts in these areas. We continue to mature this capacity to achieve a more appropriate scale,” Sassoon said.
During the period, Sasfin identified the need for a restatement, which negatively affected the opening retained earnings by 4.1% for financial periods before 2021. Notwithstanding this, the net asset value per ordinary share improved 11.86% to R52.13.
Asset Finance - mainly office automation and mining and manufacturing equipment - again reported a noteworthy performance, achieving an operating profit of R254.8m.
“We foresee continued growth in this business as we increasingly finance new asset types such as software and climate-friendly solutions,” he said.
“In Sasfin Wealth we are committed to building a world-class scalable asset management business,” Sassoon said. Assets Under Advice and Management (AUM) reached R59.2 billion, after rising by just under 10 percent. Despite this, the operating pillar showed a reduced operating profit of R58m, mainly as result of a once-off operational loss of R45m.
The merged Business & Commercial Banking pillar saw its operating loss improve 24.6% to R36.9m, driven by a 26.2% increase in Loans and Advances and total income growth reaching R303.4m.
“We are also growing lending capabilities and have put the necessary funding - including Nasira backed loans offered to women, youth and Covid-19-impacted businesses - and support in place to focus on SME lending with a personal touch,” he said.
He said an investigation into two precautionary suspended employees implicated in alleged cigarette tax fraud by Gold Leaf of Zimbabwe was still ongoing.
“Sasfin has been focused on enhancing our financial and operational environment over the last few years, which is resulting in a more streamlined business with stronger systems,” financial director Harriet Heymans said in a statement.
BUSINESS REPORT