Our opinion on the current state of SFN

Sasfin (SFN) is a banking group specializing in various finance services for small businesses and high net-worth individuals. Despite being listed on the JSE since 1987, the company has faced challenges, including a downward trend in its share price. Investors were advised to await a measurable turn in the price, such as an upside break through its long-term trendline, before further investigation.

On 16th October 2023, Sasfin announced its decision to dispose of its capital equipment finance and commercial property finance businesses to African Bank Limited, causing a sharp rise in the share price. However, the impact of COVID-19 has hindered the share's recovery.

In its results for the year ending 30th June 2023, Sasfin reported a 7.31% increase in total income but a 19.42% decline in headline earnings per share (HEPS). The net asset value (NAV) rose by 4.49% to 5122c per share. Total costs were affected primarily by increased costs within the Business and Commercial Banking pillar, as well as expenses related to an investigation into financial misconduct by former employees.

Furthermore, on 27th February 2024, Sasfin received a civil summons from the South African Revenue Services (SARS) for a damages claim of R4.782bn plus interest and penalties, related to income tax, value-added tax (VAT), and penalties allegedly owed by former foreign exchange clients of the bank.

Sasfin has a relatively small market capitalization of R484m and experiences thin trading volume, with an average daily turnover of about R55,000 worth of shares. These factors contribute to the risk associated with investing in Sasfin. Investors should carefully consider the company's financial performance, ongoing legal issues, and market conditions before making investment decisions regarding Sasfin.