Sasfin posted headline earnings of R54.83m, growing by 103.87% from R26.90m in the previous half-year, driven by improved credit performance. As a result, headline earnings per ordinary share improved by more than 100%, from 83.54 cents to 178.19 cents.
Gross loans and advances were up 10.73% to R7.74 billion, following an increase in demand for credit. The profile of the lending book improved thanks to a continued focus on collections and improved credit quality on new business growth.
"The fact that we've grown business lending by 10% in this period tells a story that businesses are borrowing again. It suggests optimistic 'green shoots' within some areas of the economy. The outlook is looking better. When businesses require growth finance, that is a good sign for the country," explained Michael Sassoon, CEO of Sasfin Holdings.
"We have now brought together our business and commercial banking by creating a merged 'Business and Commercial Banking' pillar, and we continue to enhance our offering to businesses. We will be going live with our overdraft product and digital forex platform in the coming weeks. Business and Commercial Banking has experienced a healthy recovery, moving from a loss to a profit," he added.
In November 2020, Sasfin partnered with the FMO, the Dutch Entrepreneurial Development Bank, which provided guarantees to enable Sasfin to offer credit to smaller businesses in South Africa. Sasfin has already deployed over R100m worth of loans under this scheme. In January 2022, Sandile Shabalala joined as Chief Executive of Business and Commercial Banking following a number of other senior hires to strengthen this pillar.
"The steps we have taken to introduce disruptive business banking products and bring in some exceptional talent positions us well for future growth. This illustrates our commitment to support small and medium enterprises across the spectrum as they grow into bigger businesses. This investment is showing positive outcomes, which we will continue to realise in the future," he added.
As an example, core funding increased 13.75% to R9.03 billion with a significant increase in deposits from customers and long-term funding. "Loan growth was achieved while ensuring improved credit quality. In addition, during the COVID-19 pandemic, many of our clients brought their accounts up to date, contributing to a 7.06% reduction in non-performing loans," he added.
In other pillars, Sasfin Wealth's Assets Under Management and Advice (AUM) increased 20.16% from R51.81 billion to R62.25 billion. "This reinforces the journey that we've been on in our Wealth business. We are building a strong multi-boutique money manager which is growing consistently. Last month we won our fourth consecutive Raging Bull Award, alongside two consecutive Morningstar Awards."
Despite Asset Finance showing healthy growth in lending, especially in its specialised equipment finance book, its operating profit decreased by 32.2% due to lower margins and credit impairments. Following a large focus on collections, the business took a decision to raise increased credit provisions against non-performing loans.
Sasfin has relocated to 140 West Street, Sandton, and is occupying 25% less space than it had previously, paying a lower rate per square metre, resulting in a significant cost saving in an improved location. "It has been a great transition for our clients and staff."
Given the improved performance, strong capital adequacy ratio and liquidity position, the Board has declared an interim dividend of 20% of headline earnings.
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