Sasfin ready to deal with Covid-19 fallout


Sasfin ready to deal with Covid-19 fallout

Published Date: 2020-03-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sasfin ready to deal with Covid-19 fallout

The bank says it is taking steps to protect stakeholders and has appropriate capital, liquidity and funding buffers in place.

Sasfin has reported a solid start to its financial year as a good performance at its core operations compensated for a poor showing from its direct Private Equity business. It has also benefited from a lower impairment charge due to improved credit quality.

The niche bank and financials services group said while many local SMEs were under pressure amid challenging economic conditions, its operating model had remained resilient during this period, primarily through its core lending to carefully selected, growth-orientated businesses. However, it said Covid-19 presented new challenges and it had developed a five-point plan to manage the impact of the pandemic. These included appropriate capital, liquidity and funding buffers to deal with short to medium-term shocks.

Sasfin's Banking Pillar increased revenue by 2.9% in the six months to end-December, with profit after tax increasing by 17% to R68.2 million as a result of the decrease in impairments. Wealth delivered flat profit after tax as a strong performance from Sasfin Asset Managers was offset by lower portfolio management fees and brokerage generated from local equity markets. Total assets under management and advice rose 18% to R44.1 billion due to a big increase in institutional flows as well as higher offshore assets under management.

The group grew total assets by 6.9% to R14.5 billion in the six months to end-December, while gross loans and advances rose 4.2% R7.77 billion. Non-performing loans and advances increased by 30% to R741 million but two-thirds of the increase was as a result of loans granted where there were guarantees in place from third-parties with investment grade credit ratings. It said the balance of non-performing loans were underpinned by security or rental agreements.

Total income rose 4.4% to R642 million and profit increased by 5.4% to R87 million. Its credit loss ratio declined to 117 basis points from 123 basis points. Headline earnings fell 2.3% to R78.7 million due to adjustments in the prior year which didn't recur this year. Headline earnings per share were also down by 2.3% at 244.44c and it has reduced its interim dividend by the same margin to 48.73c per share.

Sasfin said it continued to grow its deposit base off the back of its digital business banking platform, was reducing its exposure to direct Private Equity and had growth a strong lending franchise in Sasfin Capital.

Its shares fell 12% to R23.80 yesterday. The JSE's Banks Index dropped 23%.

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