Overview from Parusha Gajathar:
Chief Financial Officer

We believe our reorganised Support Services team will bolster BankservAfrica by offering leaner and more specialised support functions to enable the group to achieve its ambition of being a leader in payments and transactions.

2017 marks my first financial year with BankservAfrica as Chief Financial Officer. This year was characterised by a substantial amount of internal change as we aligned the business with its five-year strategy.

From a Support Services perspective, we have restructured several of our operations and added new functions, such as our Legal Services team, to ensure that we have the capabilities that meet our ambitions.

Restructuring can be challenging; however, it presents us with an opportunity to reflect on better ways to work. In the past, we had multiple groups responsible for governance, risk and compliance functions. Many of these teams worked in isolation, struggled to share information and had multiple frameworks and systems. This resulted in inefficiencies and hampered our ability to get a clear view of risk.

To address this, the Corporate Integrity function was created, responsible for overseeing risk, compliance, BBBEE, OHS and ethics. By integrating functions, we enhanced our ability to understand risk and thus grow and protect value.

We continued to streamline our balance sheet and rationalise business activities that did not support the new strategy. To that end and subsequent to year end, we disposed of our call centre, and the non-call centre business units part of BSVA Integrated Services (Pty) Ltd were transferred into South Africa Bankers. This was effective as of 30 June 2017. We have found reporting to be quicker and easier with the balance sheet simplified. This has allowed us to access information faster.

To address risks arising from increasing volumes and ageing legacy systems, we refreshed our core infrastructure to ensure reliable service delivery and to improve our resilience in supporting the South African economy.

We have since integrated these functions to enable BankservAfrica to define its principles and goals, determine how it will address risks and uncertainties, and grow and protect value.

In line with our mutual approach, we did not pass on any significant price increases to our clients. In fact, most increases were inflationary and in certain cases, like 3D Secure, we were able to pass on savings to our customers. Total revenue for the year was in line with the comparative period; the significant growth in volumes from our EFT and card services was off-set by lower than expected new business growth in Enabling Services. Digital Infrastructure and Retail Payments were our strongest revenue earners, contributing 47.9% and 34.4% respectively.

While our revenue remained in line with 2016, our costs increased significantly, resulting in decreased profitability. Total expenses (including operating expenses and impairments) increased by R111 million (22%). Our investment in our IT refresh has not only significantly changed our balance sheet over the last 18 months, but also negatively impacted our income statement. This is due to the effects of depreciation (44% up on the prior year) and computer-related charges (up 27% on the prior year) which hampered profitability. Staff costs increased by 14% to R38 million. Above normal salary increases reflect our investment in the skills base we need to operationalise key projects and priorities.

As a result of this, BankservAfrica produced a net profit before tax of R34 million. This is a decrease of 73% from 2016. While this is a large decrease, it’s in line with the business’s intention not to focus on profit maximisation.

We believe we add value by enabling our members’ businesses. This means that we are interested in financial sustainability over the long term, not profit maximisation. We would rather see benefits to our stakeholders multiply as the network expands and adds more value for users. Looking forward, we will continue to drive efficiencies, sustainability and reliability to better serve our customer base.

We encourage our readers to refer to our summarised annual financial statements for more information.