PSG lifts profit, starts a drive for better economic-growth plans
PSG FINANCIAL Services did well to lift recurring headline earnings per share by 11% to 81.1 cents in the year to February 29, despite the depressed economic activity and the fact that the JSE only managed a 6% return last year, chief financial officer Mike Smith said.
He said low economic growth was a challenge, but the group had relatively small market shares and with good services and returns, and continuing investment in the business aligned with their long-term advice-led strategy, it was able to pick up market share.
The dividend was lifted 17% to 42c per share. Assets under management increased 15% to R406.9 billion. Gross written premiums were up 13% to R7bn. The number of advisers increased 1% to 953, while fixed remuneration to staff increased 12%.
The wealth and asset management firm has taken the initiative to stimulate debate around improving economic growth by launching the Think Big SA competition in collaboration with Economic Research Africa.
Smith said in an online interview that they hope to see economists, economic researchers, and other intellectuals take part in this competition, so that better approaches can be found to stimulate growth.
“We have always been confident that resourceful South Africans will build a better future for themselves and their children. Nevertheless, economic activity remains depressed, and expectations have continued to plummet to new lows,” PSG directors said in the results. Smith said they would share the insights generated from the competition, broadly.
He said possible challenges to the group in the new financial year, other than low economic growth, included extreme weather-related insurance claims. In the past year their insurance business was impacted by two floods in the Western Cape and a hailstorm in Gauteng.
In addition, volatility and uncertainty around the elections might affect markets, while the degrading of infrastructure was a factor in the hardening of reinsurance markets.
“We will continue to monitor local and global events and the associated impact on the group’s clients and other stakeholders, and adjust our approach if required,” Smith said.
PSG Financial Services is to remain focused on organic growth, but would consider acquisitions that met investment criteria and offered acceptable pricing, a compelling strategic rationale, clearly defined synergies, and ease of integration. The PSG Wealth division achieved recurring headline earnings growth of 17% in the past year following a continued increase in management and other recurring fees, while transactional brokerage fees decreased due to lower trading activity over the prior year.
Client assets managed by its
Wealth advisers increased by 16% to R355.1bn, which included R19.6bn of positive net inflows. “We are confident about the prospects of this division. Our commitment to long-term relationships with clients will continue to differentiate us in the markets in which we compete,” said Smith.
PSG Asset Management’s recurring headline earnings decreased 1% after lower performance fees, but management fees increased by 19%. The division’s long-term investment track record has continued to improve.
Fund performance across the fund range was recognised at the 2023 Raging Bull Awards. The division received five fund-specific awards and won second place in the South African Manager of the Year award category.
Client assets under management increased 7% to R51.8bn, with net client inflows of R3.5bn.
PSG Insure’s recurring headline earnings fell 6% against the backdrop of a difficult environment. The division achieved gross written-premium growth of 13% as it focused on growing its commercial lines’ business, which required specialist adviser expertise.
The reinsurance programme reduced the adverse impact of catastrophe events during the year. A net underwriting margin of 9.7% was achieved, which was commendable despite being lower than the 13% achieved in the prior year, PSG directors said.