PSG Kon­sult not quit­ting SA

• De­spite chal­lenges, CEO op­ti­mistic of fu­ture growth

Business Day - - FRONT PAGE - Londiwe Buthelezi Fi­nan­cial and Busi­ness Writer buthelezil@busi­nesslive.co.za

Al­though its big­gest unit, PSG Wealth, strug­gled with lower trade vol­umes than usual, PSG Kon­sult says it re­mains ex­cep­tion­ally op­ti­mistic about SA and will not turn off­shore for bet­ter per­for­mance. The fi­nan­cial ser­vices group, with op­er­a­tions in­clud­ing wealth man­age­ment, as­set man­age­ment and short­term in­surance, re­ported an 18% rise in head­line earn­ings for the six months to Au­gust.

Al­though its big­gest unit, PSG Wealth, strug­gled with lower trade vol­umes than usual, PSG Kon­sult says it re­mains ex­cep­tion­ally op­ti­mistic about SA and will not turn off­shore for bet­ter per­for­mance.

The fi­nan­cial ser­vices group, with op­er­a­tions in­clud­ing wealth man­age­ment, as­set man­age­ment and short-term in­surance, re­ported an 18% rise in head­line earn­ings for the six months to Au­gust.

But its wealth busi­ness had a de­cline in trade vol­ume and earn­ings rose only 7%, com­pared with the aver­age of 18% achieved in the past five years. The divi­sion of­fers in­di­vid­u­als and busi­nesses a plat­form to di­rectly trade shares and other se­cu­ri­ties, among other things.

PSG Kon­sult CEO Fran­cois Gouws said it was a dif­fi­cult eq­uity mar­ket, but the com­pany in­creas­ing its to­tal as­sets un­der man­age­ment 19% was en­cour­ag­ing. “We are very op­ti­mistic about SA. I think many South African com­pa­nies have been get­ting ques­tions about why they are not di­ver­si­fy­ing and in­vest­ing off­shore, but our stance is: we are a South African com­pany. I think the re­cent po­lit­i­cal and pol­icy changes af­ford the coun­try the op­por­tu­nity to re­cover quite a lot,” Gouws said on Thurs­day.

PSG Kon­sult had recorded good trade vol­umes and funds in­flows for many years and so the com­pany re­garded mar­ket dif­fi­cul­ties in 2018 as a mi­nor set­back, Gouws said. “We’ve got a re­silience busi­ness model. We are gain­ing mar­ket share even dur­ing pe­ri­ods of dif­fi­culty.

“I think it’s be­cause we have a dif­fer­ent ap­proach to our com­peti­tors. We are ad­vice led rather than prod­uct led.”

PSG Kon­sult’s to­tal as­sets un­der man­age­ment rose to R230bn in the pe­riod un­der re­view, of which R182bn was at­trib­ut­able to PSG Wealth and R48bn to PSG As­set Man­age­ment. Short-term in­surance arm PSG In­sure in­creased its gross writ­ten pre­mium 25% to R2bn.

“Our busi­ness is heavily ori­en­tated to­wards re­tail clients, which is what sets us apart from most as­set man­agers. Most in­flows to our as­set man­age­ment busi­ness went to high­er­mar­gin funds be­cause of our fo­cus on the re­tail mar­ket.”

Gouws said that PSG Kon­sult’s strat­egy was to avoid low­mar­gin, high-vol­ume op­er­a­tions. The short-term in­surance busi­ness mainly fo­cused on the com­mer­cial lines, mostly ser­vic­ing small and mi­cro-sized en­ter­prises. PSG In­sure’s net un­der­writ­ing mar­gin im­proved to 10.5% while the coun­try’s big­gest short-term in­surer, San­tam, re­ported a mar­gin of 8.4% at end-June.

Even in 2017, when most short-term in­sur­ers’ prof­its were rav­aged by cat­a­strophic events such as the Western Cape storms and the Knysna fires, PSG In­sure’s net un­der­writ­ing mar­gin stood at 7.4% in the first half of 2017.

The divi­sion in­creased its ad­viser force to in­crease its mar­ket share in the com­mer­cial lines in­surance af­ter ac­quir­ing Absa In­surance and Fi­nan­cial Ad­vis­ers in June 2018.

WE ARE VERY OP­TI­MISTIC ABOUT SA. …RE­CENT PO­LIT­I­CAL, POL­ICY CHANGES AF­FORD SA THE OP­POR­TU­NITY TO RE­COVER QUITE A LOT

Graphic: DOROTHY KGOSI Pic­ture: PSG Source: IRESS

FRAN­COIS GOUWS

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