SASSA switchover hits Finbond’s earnings


SASSA switchover hits Finbond’s earnings

Published Date: 2019-02-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

SASSA switchover hits Finbond’s earnings

The new Post Office card that some social grant recipients have been moved to doesn't support EFT debits or stop orders.

Finbond has warned of a decline in full-year earnings after the SA Social Security Agency (SASSA) moved grant recipients to a new SA Post Office card last May.

The mutual bank and lender said local business volumes have been under severe pressure since a large portion of its SASSA client base were shifted from the incumbent Net1 to the new card. The card was launched by the Post Office and SASSA last May, but doesn't allow for EFT debits or stop orders. This has limited Finland's ability to extend credit to this segment of the market and has resulted in a big increase in SASSA write-offs and impairments. Its its previous financial year, its SASSA client base represented 16.7% of group revenue.

It now expects earnings and headline earnings per share for the year to end-February to be at least 35% lower than last year.

The group said earnings were also affected by an exceptional profit of R22.6 million following a mandatory offer in the proof period. A higher number of shares in issue following last year's rights issue and scrip dividend has also diluted earnings.

It will issue a further trading statement once it has a clearer view of the decline in earnings.

Its shares fell 0.2% to R5.59 on Friday. Its trading update was released after the close of trade.

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