Sasfin bullish despite earnings hit

Bank controller Sasfin Holdings suffered losses to its headlines earnings per share from 334,43 cents to 271,41 cents and reduced its dividend by 18,84% to 80 cents per share after a tough six months to 31 December 2016, marked by credit losses and a write-down in its Efficient Group investment.

Despite this setback, CEO Roland Sassoon was optimistic about the group's future. "We are positive about the future of Sasfin. We have made a significant investment in IT to improve client experience, digital channels and efficiencies. We hope to finalise our recently announced acquisition of the Absa equipment rental book and our BEE deal with WIPHOLD in the next few months, both of which should stimulate growth. A revised strategy will see Sasfin divided into three distinct pillars. This will enable these areas to grow with more focus."

JSE-listed Sasfin and its subsidiaries, notably Sasfin Bank, provide a comprehensive range of specialist financial products and services for business and wealth clients. This range of financial products and services focuses on the needs of entrepreneurs, corporates, institutions, and high-net-worth individuals.

Sasfin will divide its business into Banking, Wealth and Capital divisions by June 2017, as it seeks greater efficiencies and to reduce the burden of regulation. As a financial services group, Sasfin's businesses are currently subject to sector-specific regulation. The restructuring costs are not expected to be borne by shareholders. The move will entail shifting management processes and increasing its staff complement.

Sasfin is also looking to its R1,5 billion acquisition of Absa Technology Finance Solutions' loans and rental contracts book to expand its business considerably, while the potential Women Investment Portfolio Holdings (WIPHOLD) - WIPHOLD will acquire 25,1% of Sasfin's ordinary shares in issue - will buffet the group's transformation credentials.

The group has also implemented South Africa's first direct feed for bank customers with Xero Accounting, online accounting software for small businesses, as part of a drive to improve its IT infrastructure. Sasfin Bank customer using Xero will have the ability to automatically import and categorise bank statements, removing the need to make manual uploads and downloads and allowing for better visibility.

"Political and economic uncertainty coupled with market volatility continues to raise potential threats to financial stability. Nonetheless, we are cautiously optimistic about the South African economy, mainly due to the break in the drought, improved commodity prices and reduced strike action. The fixed overhead relating to regulatory compliance for a challenger banking group such as Sasfin has increased considerably. However, the initiatives the group has undertaken to improve performance should result in solid and sustainable growth for the group," explained Sassoon.

Meanwhile, Sasfin CFO Lushen Pather (pictured) has been nominated for the 2017 CFO Awards. Since joining the bank in 2014, he has been instrumental in transforming Sasfin's relationship with the South African Reserve Bank and creating a galvanized and innovative finance team.