A complete entrepreneur offering
BANKING STOCKS have been slowly moving higher with three of the Big Four at or around all-time highs (Barclays Africa Group being the exception). I certainly expect this trend to continue and, as such, have a long position in the Satrix Fini. However, the question is where is growth coming from within the new normal of higher cost bases (as seen in their cost-to-income ratio levels, which are stuck in the mid-50s)? Sure, prices will move higher, but second-tier banks likely offer better potential and the best here is Sasfin.
A small niche bank aiming at the entrepreneurial market on a price to book of just over 1.1 times, a dividend yield of around 3.8%, and a price-to-earnings ratio of around 9 times, which is cheap compared to its larger peers. Recent results showed the company doing well, with the iQuad transaction yielding especially good results. It’s also planning a transactional banking licence, which isn’t a game-changer but does mean that Sasfin will offer the complete suite to its clients.