Sasfin Holdings’ headline earnings per share plummeted 190.96% to a loss per share of 152.15 cents for the year to June 30, but a strategic “reset” has strengthened the balance sheet and enabled the group to navigate existing risks.
The directors, who also plan to delist the group as part of the reset, reported in the annual results posted yesterday that the loss for the year came to R155.24 million, compared with a R108.8m profit at the end of the previous financial year. The headline earnings loss amounted to R58.68m in 2024, compared to a R112.68m profit in 2023.
The loss was primarily impacted by an increase in expected credit losses and a decline in non-interest income due to negative fair value adjustments in the private equity portfolio.
Additionally, a provision was raised for an administrative sanction received. Sasfin Bank was recently fined R164.4m by the Prudential Authority of the SA Reserve Bank due to “historic non-compliance” related to its now discontinued foreign exchange business.
Total income fell by 7.92% to R1.28 billion. The cost-to-income ratio also increased by 8.82% to 95.51%. The return on equity slipped to a negative 3.68% from 6.81% the previous year.
As part of the strategic reset and addressing other risks, once-off costs were incurred, and short-term lost revenue opportunities contributed to the period’s loss.
However, this approach resulted in a 10.5% increase in net cash to R1.67bn.
The increase was a result of an intentional decrease in gross loans and advances of 7.19% to R8.89bn, while total core funding decreased by 1.63% to R9.67bn.
Sasfin Wealth maintained Assets Under Management and Advice of R64.98bn (2023: R67.35bn) during difficult economic conditions.
Exiting non-core activities negatively impacted total income, while core operating costs remained flat. The core businesses, Wealth and Rental Finance, performed well, while increased losses were incurred in the Business and Commercial Banking business (BCB), which the group intends to exit by the end of 2025.
The directors said that while earnings are likely to remain under pressure in the coming financial year, the group was expected to be better positioned to generate healthy returns thereafter, supported by the strengths of its core businesses.
Progress on the strategic reset announced in March included disposing of Specialised Finance and Commercial Solutions businesses, concluding the sale of the Commercial Property Finance business, implementing the disposal of the Capital Equipment Finance business to African Bank for R3.14bn, closing the Foreign Exchange business and providing clients with alternative forex solutions, further progress to exit non-strategic private equity investments, and announcing the potential delisting.
After the delisting, the group intended to continue its strategic reset by divesting from non-core activities, including BCB.
“This business has built strong capabilities over the years, holding significant inherent value with the potential to thrive in a different environment. This strategy will enable us to focus on our core Wealth and Rental Finance businesses,” the directors said.
BCB recorded an operating loss of R156.09m (R137.7m loss) due to higher impairments and lower total income. Net interest income reduced due to lower revenue generated by the Trade and Debtor Finance business, coupled with deliberate cut property and specialised lending loan books.
The Asset Finance business performed well in a challenging trading environment, achieving an operating profit of R158.7m versus R197.7m in 2023.
The Wealth segment delivered a strong financial performance while growing its client base and expanding its investment offering, despite market volatility and concentration of performance around global technology companies.
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