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Audited Consolidated Annual Results for the year ended 30 June 2023
SASFIN HOLDINGS LIMITED
(Incorporated in The Republic of South Africa)
(Registration Number 1987/002097/06)
Share code: SFN ISIN: ZAE000006565
("Sasfin", "the Company" or "Group")
AUDITED CONSOLIDATED ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2023
("ANNUAL FINANCIAL STATEMENTS") SHORT FORM ANNOUNCEMENT
At Sasfin we contribute to society by going beyond a bank to enable growth in the businesses
and the global wealth of our clients.
Salient features
Key indicators
2023 2022(1) %
Group Headline earnings (Rm) 112.683 139.841 (19.42)
Group Headline earning per share (cents) 366.18 454.43 (19.42)
Earnings per share (cents) 353.65 510.09 (30.67)
Total Income (including associate income) (Rbn) 1.410 1.314 7.31
Group profit (Rm) 108.8 157.0 (30.70)
Cost to income ratio (%) 85.38 82.85 (3.05)
Return on equity (%) 6.81 8.83 (22.88)
Net Asset Value per share (cents) 5 122 4 902 4.49
Total assets (Rbn) 14.013 13.186 6.27
Gross loans and advances (Rbn) 9.574 8.593 11.42
Deposits from customers (Rbn) 5.629 5.233 7.57
Capital adequacy ratio (%) 16.07 16.21 (0.86)
Group coverage ratio (%) 5.83 5.78 0.87
Credit loss ratio (bps) 125 25 400.0
(1) During the year, a detailed review confirmed that there were errors affecting prior periods which
required restatement as set out in note 49 of the annual financial statements ("restatements").
Financial Performance
Sasfin reported headline earnings of R112.7 million (2022: R139.8 million) for the year ended 30
June 2023, down 19.4%. Total income (including associate income) growth of 7.3% was offset
by cost growth of 10.6% and an increase in the credit loss ratio to 125 bps (2022: 25 bps). Total
costs were impacted, primarily, by an increase in costs within our Business and Commercial
Banking pillar as well as the cost of the previously reported investigation into financial misconduct
by former employees of the bank.
The credit loss ratio of 125 bps is in line with Sasfin's through the cycle target range but is
significantly higher than the unsustainably low credit loss ratio in 2022.
Sasfin Bank's balance sheet strengthened over the year with net loans and advances growing
11.5% to R9.0 billion and total assets increasing by 6.3% to R14.0 billion, supported by growth in
deposits from customers of 7.6% to R5.6 billion. Sasfin Wealth saw continued growth in Assets
Under Advice and Management ("AUM"), up 12.3% to R66.4 billion.
Strategic update
Sasfin has concluded its strategic review, resulting in the Group focusing on businesses that
generate a higher Return on Equity, where it has strong competitive capabilities namely its Wealth
business, Rental Finance business and focused Banking activities. In this regard, Sasfin recently
announced the disposal of its Capital Equipment Finance and Commercial Property Finance loan
books to African Bank Limited, to the value of R3.26 billion ("the ABL transaction"). This sale is
subject to suspensive conditions which are expected to be fulfilled early next year.
Segmental performance overview
Asset Finance
Asset Finance headline earnings declined by 12.25% to R143.7 million (2022 restated: R163.8
million), due to higher impairments. Post the ABL transaction, this pillar will comprise a focused
Rental Finance business which Sasfin has built over nearly four decades, based on deep
relationships with equipment suppliers, with a granular base of loans advanced to South African
businesses.
Wealth
Wealth saw a significant increase in headline earnings to R94.2 million (2022: R45.5 million), due
to strong income growth, off the back of the growth in AUM, improved contribution from associates
and lower costs as a result of a non-recurring operational loss experienced in 2022. Wealth
continues to expand its investment management and distribution capabilities.
Business and Commercial Banking
Business and Commercial Banking recorded a headline earnings loss of R104.3 million (2022
restated: R40.3 million loss) as a result of the significantly higher costs and impairments. While
total income was flat, net interest income grew as a result of growth in the deposit book and
continued good performance of the trade and debtor finance business, while non-interest revenue
was negatively impacted by lower fair value gains and other once off income not repeated in the
current period. As part of the strategic review, we are streamlining this Pillar to focus on activities
which should deliver improved, less volatile, and consistent financial performance.
Treasury and net unallocated Group costs make up the difference between the segmental sum
of the parts and total Group headline earnings.
Tackling Financial Crime
As previously reported, there were allegations of financial misconduct relating to clients of
Sasfin's foreign exchange business unit going back to 2014. Sasfin has cooperated with the
relevant authorities in their investigations and has terminated relationships with implicated clients.
Sasfin commissioned an independent investigation by a leading international audit firm to
thoroughly investigate the allegations. Further, the Prudential Authority of the South African
Reserve Bank ("SARB") in terms of its powers under section 135 of the Financial Sector
Regulation Act 9 of 2017, conducted its own investigation.
The evidence gathered through both investigations demonstrated that a group of Sasfin
employees in its foreign exchange business unit had colluded with the implicated clients to enable
the circumvention of exchange control and anti-money laundering regulations, as well as to
subvert Sasfin's system of internal controls. All implicated employees have been dismissed, and
criminal cases have been opened where appropriate. Both investigations found no evidence of
involvement of members of senior management nor of the board of directors in the alleged
financial misconduct. Pursuant to the identification of the misconduct by former employees, Sasfin
has progressively taken significant steps to strengthen the Group's lines of defense and continues
to enhance these further.
Reportable Irregularity
On 22 September 2023, the Company's external auditors submitted an initial notification to the
Independent Regulatory Board for Auditors ("the IRBA") that a suspected reportable irregularity
may have occurred, relating primarily, to findings emanating from the investigation mandated by
the SARB. The investigation looked into allegations that Sasfin Bank contravened provisions of
various laws, including the Financial Intelligence Centre Act, 2001, the Banks Act, 1990 and the
Exchange Control Regulations, 1961 (refer to note 26 of the annual financial statements), and
that certain prescribed officers and the board of directors of the Company and of Sasfin Bank
may have failed to adequately discharge their duties under section 76(3)(c) of the Companies
Act, 2008 read with sections 60 and 60B of the Banks Act, 1990.
After additional audit work, the auditors notified the IRBA on 22 October 2023 that in their
professional opinion, the suspected reportable irregularity is no longer taking place (refer to note
51 in the annual financial statements).
Annual results and Integrated Report delay
The impact of the restatements referred to above and consequential extended substantive audit
work, together with the occurrence of significant post balance sheet events, contributed to the
delay in the finalisation of the Company's annual financial statements and completion of the audit
thereof.
These factors, in turn, have resulted in a delay in the finalisation of the Company's Integrated
Report, which will be published on or before 30 November 2023.
Conclusion
The Group is committed to the execution of its revised strategy built on its Wealth, Rental Finance
and focused Banking businesses. While there will be costs associated with transitioning to this
strategy, the outcome will result in a more efficient and streamlined business that can generate
sustainable stakeholder value.
Dividend Declaration
As a result of the challenging economic climate and subdued financial performance, the board of
directors of Sasfin ("Directors") has resolved not to declare a final dividend (2022: 120.90 cents).
Short form Announcement
This short-form announcement is the responsibility of the Directors of the Company and is a
summary of the information in the Company's audited annual financial statements for the year
ended 30 June 2023 published on SENS on 31 October 2023, and does not contain full or
complete details of the annual financial statements, which are available for viewing on the
following websites:
Company's website: https://www.sasfin.com/investor-relations
JSE website: https://senspdf.jse.co.za/documents/2023/jse/isse/sfn/sfn2023.pdf
While this announcement is not audited, the consolidated annual financial statements from which
the results in this announcement are derived, were audited by the Company's auditors,
PricewaterhouseCoopers Inc, who expressed an unmodified opinion thereon. Their audit opinion
can be viewed on the Company's website (https://www.sasfin.com/investor-relations).
Any investment decision by investors and/or shareholders should be based on consideration of
the information contained in the annual financial statements. Copies of the annual financial
statements are available for inspection at our offices on weekdays during business hours (at no
charge) or via a secure electronic location on request from the Company Secretary (by e-mail:
charissa.dejager@sasfin.com).
Mr. Deon de Kock Mr. Michael Sassoon
Chair Group Chief Executive Officer
Johannesburg
31 October 2023
Sponsor: Questco Corporate Services (Pty) Ltd
Date: 31-10-2023 10:15:00
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