Finbond takes revenue hit from Sassa card switch over
The SA Social Security Agency moved grant recipients to a new SA Post Office card in May 2018, and the new card does not allow stop orders
Credit-provider Finbond said on Thursday a card switch over at the SA Social Security Agency (Sassa) resulted in a 94.6% plunge in loans to grant recipients in its six months to end-August.
The company’s Sassa client base has fallen by two thirds after Sassa switched to a new SA Post Office card in 2018.
The card does not avail the functionality to load electronic fund transfer (EFT) debits or stop orders, which limits Finbond’s ability to effectively collect amounts due and payable from this segment of the market.
Despite this, Finbond said turnover rose 3.3% to R1.29bn during the interim period, thanks to a strong performance from its North American operations. Total revenue from these operations increased 16.2% to R694m
The company said its SA business focus remained on small short-term loans through its 436 branches. Total revenue from Finbond’s lending activities made up of interest, fee and other micro finance related income decreased 12.1% to R439m.
The company said its evolution from a short-term micro finance provider to a retail bank in SA, as well as its continued expansion in the North American short-term lending market, would achieve good results in the medium and long term.
Finbond’s share price has lost 43.93% so far in 2019.