JOHANNESBURG – Sasfin Holdings yesterday reported that its profits tumbled more than 130 percent on credit impairments and weak private equity valuations.
The group said its earnings declined 130.14 percent to a loss of R48.62 million for the year to end June from a R161.31m profit last year.
Chief executive Michael Sassoon said credit impairment charges more than tripled to R252.62m compared to R80.36m a year earlier.
Sassoon said the loss was occasioned by the private and property equity devaluations and IFRS 9 credit provisions, which were significantly influenced by the economic shock caused by Covid-19 and the sovereign downgrade.
“However, with our strong capital adequacy and liquidity base, the group is in a good position to grow both organically and acquisitively in the future,” Sassoon said.
The group’s capital adequacy ratio improved to 16.99 percent compared to 15.67 percent last year.
Despite these challenges the group reported a 3.17 percent growth in deposits to R5.14 billion, while net loans and advances contracted by 11.87 percent to R6.61bn, due to lower demand for credit and a conservative credit approach adopted during the Covid-19 lockdown.
Total income declined 6.37percent to R1.15bn and headline earnings per share (Heps) fell by 130.14 percent to a loss of 151cents a share compared to Heps of 501c reported last year.
The group did not declare a final dividend for the year, in line with the guidance issued by the Prudential Authority of the South African Reserve Bank.
Sasfin Bank posted an operating loss of R51.39m compared to a profit of R169.02m a year earlier as a result of the increased credit provisions.
Sasfin Capital reported an operating loss of R66.08m from an operating profit of R10.65m last year as a result of the revaluation of the private equity and property equity portfolio.
Sasfin Wealth was a stand-out performer after increasing its operating profit to R66.41m, up from R52.71m last year, due a record growth in assets under management of 18percent to R48.7bn.
Sassoon said Sasfin obtained a R390m funding line to grow SME lending and a $35m loan guarantee facility, Nasira, from FMO, the Dutch Development Bank, to provide loans to women, youth, migrants and Covid-19 impacted businesses.
He said the offering is the next step in their digital business banking evolution and will be launched in 2021.
“Nasira has been rolled out by the FMO in other parts of the world and we are proud to be the first South African bank to introduce this solution,” he said.
Sasfin shares declined 0.65percent on the JSE yesterday to close at R15.40.