Sasfin, the niche business bank and asset manager, swung back into profit as its credit loss ratio improved significantly amid a gradual economic recovery that saw clients hurt by Covid-19 start making good on loan repayments.
The financial services group, which focuses on providing business banking services to entities ranging from start-ups to those with turnovers of about R500m, posted a R77.64m profit for the year ended June 30 2021, up from a R43.15m loss in its previous financial year. The financial turnaround, outlined in Sasfin’s annual results released on Tuesday, allowed it to declare a final ordinary share cash dividend of 131c per share, after it was forced to skip interim dividends.
Sasfin’s credit loss ratio fell to 75 basis points in the full-year period, down from 303 basis points the previous fiscal year, as SA’s gradual economic recovery resulted in a marked improvement in loan repayment arrears. The ratio measures impairment losses on loans and advances, divided by total average advances. The bank said its up-to-date loans improved to just less than 85% of its total book, from less than 82% in its 2020 fiscal year. Nonperforming loans also fell from R712m in the 2020 fiscal year to R611m in the current period.
“We worked closely with our clients during the Covid-19 pandemic and many of these clients have brought their accounts up to date contributing to a 14.16% reduction in non-performing loans,” Sasfin CEO Michael Sassoon said.
While each of Sasfin’s divisions, which span asset finance, wealth, business banking and capital, grew their income in 2021, the group said it continued to anticipate tough economic conditions ahead. As such, the group has taken steps to streamline its business, which included selling some of its noncore operations.
Sasfin closed its Hong Kong office, Sasfin Asia, and moved the operation to SA, which it said released $12m of capital into Sasfin Bank. Still, the group incurred a one-off R30m cost to relocate its foreign trade finance operation to SA, which was largely due to the unwinding of its hedging and foreign exchange reserves.
Sasfin Wealth also sold its 21% stake in Efficient Group for R146.2m, resulting in an after-tax profit of R12.2m. It also sold 100% of Sasfin Commercial Solutions, incurring a small loss in the process, and impaired intangible assets worth R40.6m which it said was related to the “sunsetting” of legacy systems.
As part of its streamlining process Sasfin will be adopting a new hybrid working model at the end of 2021, when it will relocate to new premises in Sandton. This will see the group occupy 25% less space than it currently does while paying a lower rate per square metre than it did at its hold offices in Waverly.
“We expect no more than 60% of our staff to work from the office at any one point [in future],” Sassoon said. “Because of the state of the property market we are going to be realising quite a material saving in terms of the cost per square metre.”
Sasfin also said its long-standing chair Roy Andersen and nonexecutive director Grant Dunnington would retire after its November AGM. Deon de Kock will take over as the new chair.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.