Sasfin reports annual loss as it progresses with strategic reset
One-off costs and short-term lost revenue opportunities contributed to the loss, the group says
22 October 2024 - 11:33
byJacqueline Mackenzie
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Sasfin's office at in Johannesburg. Picture: FREDDY MAVUNDA/BUSINESS DAY
Sasfin, which is delisting from the JSE, has reported an annual loss due to one-off costs and short-term lost revenue opportunities.
The group reported a headline loss of R58.68m for the year to end-June after a profit of R112.68m in 2023. Its headline loss per share amounted to 190.96c compared with headline earnings per share (HEPS) of 366.18c a year ago.
The loss was due to an increase in expected credit losses and a decline in non-interest income, driven by negative fair value adjustments in the private equity portfolio. In addition, a provision was raised in respect of administrative sanctions received, it said in a statement on Tuesday.
The exiting of noncore activities also negatively affected total income, while core operating costs remained flat. In due course, costs were expected to reduce after the strategic reset, it said.
Its recent strategic reset has resulted in a strengthened balance sheet. One-off costs incurred and short-term lost revenue opportunities contributed to a loss for the period.
Business Day TV talks to CEO Michael Sassoon.
In 2023 Sasfin announced it intended to dispose of its specialised finance and commercial solutions businesses, conclude the disposal of its commercial property finance business and its capital equipment finance business to African Bank Limited for about R3.14bn, and close its foreign exchange business.
The reset has resulted in an increase in net available cash of 10.50% to R1.67bn and an intentional decrease in gross loans and advances of 7.19% to R8.89bn, while total core funding decreased by 1.63% to R9.67bn.
Sasfin Wealth had maintained assets under management and advice of R64.98bn during difficult economic conditions, it said.
The group’s core businesses, wealth and rental finance continued to perform well, while increased losses were incurred in the business and commercial banking business, which Sasfin intends exiting by the end of 2025.
While earnings were likely to remain under pressure in the coming financial year, the group expected to be better positioned thereafter to generate healthy returns, supported by the fundamental strengths of its core businesses, it said.
Following the proposed delisting, the group will continue its strategic reset by divesting from noncore activities, including business and commercial banking.
“This business has built strong capabilities over the years, holding significant inherent value with the potential to thrive in a different environment. This strategy will enable us to focus on our core wealth and rental finance businesses,” it said.
Significant progress had been made by exiting noncore activities and navigating challenges, positioning Sasfin well to execute the remaining strategy in the months ahead, it said.
Business Day reported in August that the SA Reserve Bank’s Prudential Authority had fined Sasfin nearly R210m for breaching the country’s foreign exchange laws. However, the company still faces a mammoth R4.9bn tax bill from the SA Revenue Service (Sars), which it is disputing.
Sasfin said in August that the central bank had informed it of its decision to impose a R209.6m fine, of which R49m was suspended, meaning the company would have to pay the fiscus R160.4m.
“These sanctions principally relate to allegations of historic noncompliance within Sasfin Bank’s discontinued foreign exchange business. Sasfin has [worked], and continues to work proactively and transparently with the relevant authorities and regulators,” the company said.
“Sasfin has taken legal advice and is considering further representations, which could result in a review or appeal of the sanctions in terms of the provisions of the relevant regulations,” it added at the time.
In 2023, Al Jazeera reported that staff of Sasfin and two other banks had been on the payroll of Mohamed Khan, an alleged accomplice of cigarette magnate Simon Rudland, alleged to be the kingpin behind Zimbabwean gold smuggling gangs. These are said to smuggle gold into SA, the proceeds of which are allegedly laundered through Khan’s company, Salt Asset Management, before being transferred to offshore bank accounts.
Michael Sassoon, CEO of bank and wealth management company Sasfin Holdings, said in the group’s 2023 annual report that apart from firing the implicated employees and opening criminal cases, the company had bolstered its compliance and control functions.
In July, Sasfin said it would soon delist from the JSE after it offered minority shareholders nearly R1bn to buy them out and take the company private.
The offer, at R30 a share, was a 65% premium to the 30-day volume-weighted average, the group said, adding that the transaction would be funded by its two largest shareholders, Unitas Enterprises and black women-owned investment company Wiphold.
Separately on Tuesday, Sasfin announced that Gloria Tomatoe Serobe would be appointed as chair of its subsidiary, Sasfin Wealth, with immediate effect.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Sasfin reports annual loss as it progresses with strategic reset
One-off costs and short-term lost revenue opportunities contributed to the loss, the group says
Sasfin, which is delisting from the JSE, has reported an annual loss due to one-off costs and short-term lost revenue opportunities.
The group reported a headline loss of R58.68m for the year to end-June after a profit of R112.68m in 2023. Its headline loss per share amounted to 190.96c compared with headline earnings per share (HEPS) of 366.18c a year ago.
The loss was due to an increase in expected credit losses and a decline in non-interest income, driven by negative fair value adjustments in the private equity portfolio. In addition, a provision was raised in respect of administrative sanctions received, it said in a statement on Tuesday.
The exiting of noncore activities also negatively affected total income, while core operating costs remained flat. In due course, costs were expected to reduce after the strategic reset, it said.
Its recent strategic reset has resulted in a strengthened balance sheet. One-off costs incurred and short-term lost revenue opportunities contributed to a loss for the period.
Business Day TV talks to CEO Michael Sassoon.
In 2023 Sasfin announced it intended to dispose of its specialised finance and commercial solutions businesses, conclude the disposal of its commercial property finance business and its capital equipment finance business to African Bank Limited for about R3.14bn, and close its foreign exchange business.
The reset has resulted in an increase in net available cash of 10.50% to R1.67bn and an intentional decrease in gross loans and advances of 7.19% to R8.89bn, while total core funding decreased by 1.63% to R9.67bn.
Sasfin Wealth had maintained assets under management and advice of R64.98bn during difficult economic conditions, it said.
The group’s core businesses, wealth and rental finance continued to perform well, while increased losses were incurred in the business and commercial banking business, which Sasfin intends exiting by the end of 2025.
While earnings were likely to remain under pressure in the coming financial year, the group expected to be better positioned thereafter to generate healthy returns, supported by the fundamental strengths of its core businesses, it said.
Following the proposed delisting, the group will continue its strategic reset by divesting from noncore activities, including business and commercial banking.
“This business has built strong capabilities over the years, holding significant inherent value with the potential to thrive in a different environment. This strategy will enable us to focus on our core wealth and rental finance businesses,” it said.
Significant progress had been made by exiting noncore activities and navigating challenges, positioning Sasfin well to execute the remaining strategy in the months ahead, it said.
Business Day reported in August that the SA Reserve Bank’s Prudential Authority had fined Sasfin nearly R210m for breaching the country’s foreign exchange laws. However, the company still faces a mammoth R4.9bn tax bill from the SA Revenue Service (Sars), which it is disputing.
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Sasfin said in August that the central bank had informed it of its decision to impose a R209.6m fine, of which R49m was suspended, meaning the company would have to pay the fiscus R160.4m.
“These sanctions principally relate to allegations of historic noncompliance within Sasfin Bank’s discontinued foreign exchange business. Sasfin has [worked], and continues to work proactively and transparently with the relevant authorities and regulators,” the company said.
“Sasfin has taken legal advice and is considering further representations, which could result in a review or appeal of the sanctions in terms of the provisions of the relevant regulations,” it added at the time.
In 2023, Al Jazeera reported that staff of Sasfin and two other banks had been on the payroll of Mohamed Khan, an alleged accomplice of cigarette magnate Simon Rudland, alleged to be the kingpin behind Zimbabwean gold smuggling gangs. These are said to smuggle gold into SA, the proceeds of which are allegedly laundered through Khan’s company, Salt Asset Management, before being transferred to offshore bank accounts.
Michael Sassoon, CEO of bank and wealth management company Sasfin Holdings, said in the group’s 2023 annual report that apart from firing the implicated employees and opening criminal cases, the company had bolstered its compliance and control functions.
In July, Sasfin said it would soon delist from the JSE after it offered minority shareholders nearly R1bn to buy them out and take the company private.
The offer, at R30 a share, was a 65% premium to the 30-day volume-weighted average, the group said, adding that the transaction would be funded by its two largest shareholders, Unitas Enterprises and black women-owned investment company Wiphold.
Separately on Tuesday, Sasfin announced that Gloria Tomatoe Serobe would be appointed as chair of its subsidiary, Sasfin Wealth, with immediate effect.
With Kabelo Khumalo
mackenziej@arena.africa
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