Sasfin reports 65.8% decline in headline earnings due to COVID-19

Sasfin, a banking institution, has reported a 65.8% decrease in headline earnings for the year ended December 2020. The bank's revenue also experienced a dive of 1.5%, indicating the significant impact of the COVID-19 pandemic on its financial performance. In a recent interview with CNBC Africa, Sasfin CEO Michael Sassoon shed light on the challenges faced by the bank and the strategies employed to navigate through the turbulent period. One of the major impacts of the pandemic on Sasfin was the substantial increase in credit loss ratio. Sassoon mentioned that the bank had to create credit provisions totaling 300 million rand over the last 12 months, primarily due to the struggles faced by business clients in making payments. The hospitality, tourism, and contract catering sectors were highlighted as the hardest hit by the lockdown measures imposed during the pandemic. On the bright side, Sasfin observed some green shoots in the resource rally, with mining and related companies showing signs of improvement. The CEO expressed hope for the avoidance of further lockdowns and emphasized the unpredictable nature of the situation with the looming threat of third and fourth waves in the pandemic. To mitigate the impact of the financial downturn, Sasfin undertook cost-cutting measures, resulting in a 6.5% decline in costs and an improved cost-to-income ratio. These efforts were part of a long-term strategy to streamline business operations and explore new ways of working. While Sasfin managed to avoid retrenchments directly linked to COVID-19, the bank did make some reductions in headcounts through the integration of teams and process optimizations. Moving forward, Sasfin plans to adopt a hybrid work model that combines remote work and office presence to foster collaboration and enhance productivity. Despite the cautious approach to extending credit during the volatile period, Sasfin remains optimistic about the future outlook. The bank is exploring partnerships to provide credit to small businesses and anticipates an increase in credit demand as the economy recovers. Sasfin also participated in the government's loan guarantee scheme and plans to exhaust its allocation, indicating a willingness to support businesses in need. As the economy navigates through uncertainty, Sasfin acknowledges the challenges but remains positive about the small wins and reforms being implemented to create a more conducive business environment. While the road to recovery may be gradual, Sasfin and the banking sector are hopeful that these efforts will eventually translate into economic benefits.