Sasfin takes shuddering blow to earnings

JSE-listed Sasfin Holdings has reported a massive 41.81 percent decline in headline earnings per share

JSE-listed Sasfin Holdings reported a massive 41.81 percent decline in headline earnings per share to 157.95 cents a share for the six months to end December, down from 271.42 cents as compared to last year.

The group attributed the drop primarily to a large credit event related to a single client, a change in the accounting estimate of certain deferred tax assets and a change in the group's estimate of a deferred tax liability.

Total income was down to R578 million, declining by R14,7 million as compared to last year’s amount of R592.7 million.

The group’s profit came in at R46.2 million, almost declining by a half compared to R84.7 million reported a year ago.

Nevertheless, Sasfin managed to declare an interim dividend of 46.90 cents a share.

Despite the decline, newly appointed CEO Michael Sassoon was confident that the company had taken measures to put matters to rights.

“While our interim results are certainly disappointing, the core operations of the group remain solid. Sasfin has been impacted by the challenging SME credit environment over the past 18 months, with our credit-loss ratio now sitting at 200 basis points and we have therefore taken meaningful steps to enhance our credit policy and processes,” he explained.

Sassoon has made moves to strengthen his leadership team, installing Angela Pillay as financial director and Erol Zeki as CEO of Sasfin Wealth, as well as new heads of credit, risk, compliance and audit. Gloria Serobe, Gugu Dingaan, Gugu Mtethwa, Shaun Rosenthal and Richard Buchholz have also added their weight to the board as non-executive directors.

Sasfin is also putting money into innovation and digitization, including the rollout of its new digital bank offering to small businesses and individuals, as well as digitally enabled wealth management products and services.

Sassoon says that while the South African economy remains weak, renewed business and investor confidence bodes well for the country and Sasfin.

“We expect trading conditions to remain challenging for the second half of the financial year, but we are cautiously optimistic about the improved political situation. We believe that our strong balance sheet, good brand and diversified product offering, together with the investments we are making in human capital and technology, position Sasfin well for the future. We expect that these efforts, together with our renewed focus on growing revenue, active management of our credit portfolio and cost management will result in long-term value creation.”