Sasfin’s impairment charges double
Group CEO Michael Sassoon suspects fraud by borrowers is partly responsible as company headline earnings plummet 37%
Sasfin, the banking group that lends to business owners, almost doubled its impairment charges in just one year. In what the group’s CEO Michael Sassoon suspects was partly a result of fraud by borrowers, Sasfin lost R144.1m to impairment charges in the year to June 2018 compared to R81.4m in 2017. Companies incur impairment charges when it is likely that some of the money lent to customers will not be fully repaid. The high level of Sasfin’s impairment charges sent the company’s headline earnings tumbling by 37% to R122.1m and the return on shareholder’s equity decline from 11.5% to 8%. But of most concern was the company’s credit loss ratio which has more than doubled in the past five years. At 197 basis points, it is more than double that of Nedbank, Standard Bank and Absa. It is also close to doubling FNB’s. However, Sasfin’s higher credit loss ratio can be explained by the fact that it plays in a riskier environment, lending to both small and unstable as well as big businesses....
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