The bank recently reviewed its credit policy and lending criteria. Sassoon says the strategy will be to have a bigger spread of clients, and to grow the number of smaller clients on Sasfin’s new digital banking platform Byond, launched in March, which is linked to Xero accounting software and could be a boon for smaller clients who don’t have in-house accountants.
“We’ve tactically embedded Xero … in such a way that businesses can access the basic payroll, basic accounting system and automatic invoicing from one account, and it is working,” Sassoon says. “We are seeing substantial growth in customer numbers every month.”
To get more established businesses on its books, Sasfin is targeting those that generate between R10m and R200m in annual turnover as potential clients for trade and debtor finance.
“Our fundamentals remain the same but we have to look at how and where we can do things differently,” Sassoon says, and the group’s income stream would change substantially in the next few years.
For instance, Sasfin increased its foreign revenue by 32% in the past financial year and its offshore assets under management now sit at R10bn. “We are making strides in growing foreign income but we want to be more aggressive in other areas as well.”
The company is exploring offshore opportunities for trade and debtor finance as well.
In SA, it is branching into mezzanine and bridge finance and will soon announce a partnership with a third party, which is likely to be a retailer or telecoms company.
Through the partnership Sasfin will roll out some of its products to the consumer market under the third party’s brand. So far the company has focused solely on providing credit and banking products to business owners, but the imminent partnership will facilitate its entry into the highly contested low-income segment.
But while the recovery and diversification plans promise to re-establish Sasfin’s grip on the market, shareholders are still concerned that they will not have much impact on the bottom line in the short term. The company’s cost-to-income ratio is not declining as fast as they would like, and the burgeoning loans and advances are funded through additional borrowing rather than customer deposits.
Sassoon says while the full benefit of these initiatives will be realised in the medium to long term, there should be short-term improvements as well, and the credit-loss ratio in particular should be down next year.