Divisional reports

Financial Services

Sustainability

60% of employees are women

CSI spend increased 32% to R4m

R15m spend on training, learnerships and bursaries

29% less Scope 1 CO2 emissions

Japie van Niekerk, chief executive
The Eqstra acquisition will enhance Bidvest Bank’s focus on its fleet management niche.”
Japie van Niekerk, chief executive

Salient features

  • Trading profit 7.5% down at R585 million and revenue up 5.4%
  • ROFE: 16.4%
  • Good cash generation
  • Eqstra will create funding, scale and operational efficiencies and result in a more balanced fleet exposure
  • Integrated banking App launched by Bidvest Bank

Review of the year

Bidvest Bank had a reasonable year and increased trading profit, despite no contribution from any large fleet full maintenance lease contracts and with certain contracts running down, specifically, Transnet and Telkom.

Deposits were 15.4% higher with the business and personal banking offering delivering an increase in profits and showing pleasing signs of growth. The investment portfolios ended the year significantly down in the context of a poor JSE market performance, which was the largest contributor to the reduction in trading profit.

Bidvest Bank has secured non-exclusive agreements with both MoneyGram and Western Union, which is a first for South African money transfer providers. The globalised World Currency Card™ programme has been launched in Botswana, Lebanon, Mauritius and Namibia.

Bidvest Insurance experienced a challenging year. Results were disappointing as this unit was largely impacted by the subdued motor vehicle market. Strategic relationships with third-party companies, through the division’s Affinity Channel, continues to be the largest contributor to profitability and therefore is a major area of focus for new policy sales. Financial and insurance products marketed and sold directly – through the Direct Channel – had a reasonable year.

The fast-growing life insurance activities continue to cause new business strain on the income statement. FMI’s profits were lower, despite sales numbers that were about 20% higher than last year. Significant work is being done to improve broker support. FMI has been focused on a strategic change programme for the majority of the year and we expect continued strong sales growth.

There were good results from Compendium and FinGlobal, which both delivered double digit profit growth, and Tradeflow had a pleasing year.

Bidvest Wealth and Employee Benefits has turned the corner with a new management team that is making good progress on the implementation of its strategic plan.

Cannon Asset Management has refocused after a difficult year and has a heightened emphasis on asset growth, with synergies and support between the division’s other units also being pursued.

Looking forward

The agreement to acquire 100% of Eqstra Fleet Management and Logistics remains subject to various approvals. Eqstra is a comprehensive fleet leasing and management solutions business, mainly to the corporate sector, which has some 12 300 vehicles under lease and 120 000 fleet products under management. The effective date of the transaction is expected to be towards the end of 2019.

Vehicle deliveries in terms of the new Transnet heavy commercial contract, which was recently awarded to Bidvest Bank, started in the new financial year and is expected to make an important contribution. Management is intensely focused on marketing and efficiency campaigns and cost control throughout the division is a key imperative.

FMI’s growth will continue with expected profitability. An increase in transactional and lending activities within business banking are being planned, as well as continued growth in individual and business deposits.