Sasfin to report a loss due to provisions

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The bank and financial services group says it has focused on ensuring a strong balance sheet to withstand further shocks to the economy.

Sasfin will report a full-year loss after it increased provisions for credit impairments and the value of its private equity investments fell. It says already weak economic conditions were exacerbated by Covid-19 and Moody’s sovereign ratings downgrade in March.

In a trading statement, the niche bank and financial services group said that under IFRS 9 accounting standards it had to take a forward view of the economy in its credit provisioning and private equity valuations. As a result, the adjustments in its results for the year to end-June were expected to be largely once off in nature. With SA businesses under increasing pressure, its non-performing loans had increased to 10.1% of total loans, up from 9.2% last year. Together with forward looking provisions taken against its performing loans, it increased its credit-loss ratio to about 300 basis points, from 102 basis points previously.

In June, the banks said it had granted payment holidays to clients representing just under 20% of its total loans and advances in line with the Prudent Authority of the Reserve Bank’s directive on Covid-19 restructured loans. In addition to supporting clients and staff during the pandemic, it said its focus was on ensuring a strong balance sheet to withstand further shocks to the economy. It ended the period with net available cash of R2.38 billion, up from R2.07 billion and year earlier, and improvements in its key regulatory liquidity, funding and capital ratios, which were well above the Prudential Authority minimum requirements.

For the year, it said it would report a headline loss of between 148c and 156c per share, down from earnings of 501c last year, while its basic loss per share would be between 183c and 192c from earnings of 460c previously.

Over the period, Sasfin Wealth grew assets under advice and management by 18.5% to R48.7 billion, with foreign assets now comprising 35% of total assets under management.

The Group’s meaningful ongoing investment in digitalisation ensures that we are transforming the way we work and the banking experience of our clients, which will allow us to optimise our service delivery and cost base in the future,” Sasfin said. “This, together with the prudent steps taken in the last six months in strengthening our capital and liquidity base, will ensure that the Group is well positioned to take advantage of both organic and acquisitive growth opportunities.”

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