Despite a disappointing decrease in headline earnings, Sasfin believes that future plans and growth strategies are set to see positive future prospects for the Group.
Coming off strong growth in headline earnings of 29.03% in 2016, Sasfin delivered a disappointing 16.34% decrease in headline earnings to ZAR194.151 million (2016: ZAR232.080 million) and headline earnings per share to 611.76 cents (2016: 731.27 cents).
This was largely due to an increase in the credit-loss ratio from 108 bps to 124 bps arising from two unusual credit losses, and the impact of a mark-to-market loss on the Group’s strategic investment in Efficient Group Limited (Efficient).
“While our results this year did not meet our expectations, we are positive about the upcoming year. This depends, however, on how the worrying political and economic environment unfolds,” says Roland Sassoon, Sasfin Chief Executive Officer.
“That said, we look forward to new initiatives such as our restructure to support the growth of the business; our empowerment transaction with Women Investment Portfolio Holdings Limited (WIPHOLD), which is subject to shareholder and regulatory approvals; and the expected acquisition of the Absa Technology Financial Solutions (Pty) Limited (ATFS) rental book.”
“During 2016, the Group acquired a 14.32% interest in Efficient. While the underlying performance of Efficient has been largely in line with expectations, the share price has experienced significant volatility driven by very thin volumes resulting in large mark to market swings. Excluding the impact of Efficient in both years, the Group’s headline earnings would have been down 0.77% at R216.807 million (2016: R218.491 million),” says Michael Sassoon, Sasfin Executive Director.
Total assets grew by 14.71% (2016: 1.27%) to ZAR12.623 billion (2016: ZAR11.004 billion), driven by an 84.52% growth in cash and short-term negotiable securities to ZAR3.525 billion (2016: ZAR1.911 billion).
The tough economic and credit environment resulted in muted growth in gross loans and advances to customers of 4.06% (2016: 20.65%) to ZAR6.711 billion (2016: ZAR6.449 billion).
The Group’s funding base grew by 22.95% (2016: 5.96%) to ZAR8.979 billion (2016: ZAR7.303 billion), largely driven by a 39.82% growth (2016: 2.12% decrease) in deposits from customers to R4.483 billion (2016: ZAR3.207 billion).
During the year Sasfin sold 70% of its investment in Imperial Sasfin Logistics (Pty) Ltd (ISL) to Imperial Holdings. Sasfin is confident about the future prospect of ISL under the control of the Imperial Group.
“Excluding the impact of Efficient and the deconsolidation of ISL, total income increased by 6.86%, predominantly as a result of the muted growth in loans and advances in Business Banking and flat revenue in Wealth, while operating costs increased by 9.12% (2016: 19.81%) following the Group’s continued investment in information technology, risk and compliance,” explains Sassoon.”
The Group’s cost-to-income ratio increased to 72.12% (70.35% excluding Efficient) from 68.89% (70.09% excluding Efficient) in 2016, while the Group JAWS ratio was a negative 4.54% (positive 0.01% excluding the impact of Efficient) (2016: positive 3.79% (positive 3.47% excluding the impact of Efficient).