Sasfin sees future earnings boost from IT, acquisitions
SASFIN Holdings yesterday said the money it invested in improving its information technology (IT) division as well as acquisitions would help to boost earnings in the future.
Chief executive Roland Sassoon said the group remained bullish about its future.
Sassoon said the company now hoped to finalise the recently announced acquisition of the Absa equipment rental book and its BEE deal with Wiphold in the next few months, both of which should stimulate growth.
He said the investment in IT was expected to yield results within two years.
“We had to comply with regulations and that meant we must update our systems and banking has become an IT dominated environment,” Sassoon said. “We are confident we are going to see a return on investment in a year or two.”
The company reported an 18.84 percent decline in both headline earnings and headline earnings per share for the six months to end December.
Headline earnings dropped to R86.14 million, down from R106.137m while headline earnings per share came in at 271.42 cents a share as compared to 334.43c a share reported at the end of 2015.
Sassoon said the decline was largely due to two unusual credit losses as well as a writedown in the investment in Efficient Group Limited.
Increase scale “The unusual volatility in earnings requires us to increase scale and granularity in our business. Further reasons for the poor performance were the low growth levels (assets grew by 7.48 percent and gross loans and advances by 7.89 percent) and a material increase in expenses in order to comply with new regulations,” he said.
The group’s Business Banking and Wealth divisions took some knocks with bad debts and some clients investing offshore while the Capital and Transactional Banking and Treasury units performed well with the latter showing deposits from customers increasing 16.13 percent to R4.017 billion.
Sassoon said that there were however encouraging signs in the country that should stimulate growth.
“The drought is showing signs of subsiding, with the economy recovering and there are no serious strikes. However, the political uncertainty continues to worry business. Foreign investors don’t want to invest in a country that has instability,” he said.
The board declared a dividend of 80 cents a share, down by 18.84 percent compared to 98.57c a share reported in 2015.
Sasfin said it would in the future consider dividing its operations into three distinct pillars of Banking, Wealth and Capital. “This will enable these areas to grow with more focus,” the group said.
Sasfin shares closed flat at R59 on the JSE yesterday.