PSG Financial Services reported robust interim results for the six months to the end of August 2024, demonstrating resilience and strong financial performance despite challenging operating conditions. The group reported a 28% increase in recurring headline earnings per share and a return on equity of 26.2%.
Given the group’s strong financial position, the board declared an interim dividend of 17 cents per share, up from 13.5 cents in the previous comparable period.
PSG’s dividend pay-out ratio remains between 40% and 60% of full-year recurring headline earnings, excluding intangible asset amortisation.
According to chief executive Francois Gouws (pictured), the group’s solid performance can be attributed to favourable equity market conditions and sustained high interest rates during the period.
Gouws noted that although operating conditions remained tough, PSG’s advice-led business model allowed the firm to leverage these market factors effectively. The group’s key financial metrics highlight its competitive advantage in navigating volatile markets.
PSG saw a 15.9% increase in total assets under management (AUM), which rose to R435.7 billion. This growth was driven by the strong performance of PSG Wealth, which saw a 16.4% increase in AUM to R379.1bn, and PSG Asset Management, which grew by 12.4% to R56.6bn.
PSG Insure also performed well, with gross written premiums increasing by 10.3% to R3.7bn.
PSG Wealth continued to demonstrate solid performance, with a 13% increase in recurring headline earnings. Core income, comprising management and other recurring fees, grew during the period, while transactional brokerage fees decreased because of reduced trading activity.
The adviser network expanded, with a net increase of 20 wealth advisers, bringing the total to 628.
PSG Asset Management posted a 57% growth in recurring headline earnings, attributed to strong fund performance and the division’s long-term track record in delivering top-quartile, risk-adjusted investment returns.
Despite a challenging industry environment, PSG Insure recorded a 41% increase in recurring headline earnings. The division focused on growing its commercial lines business, requiring specialist expertise.
A comprehensive reinsurance programme, combined with quality underwriting practices, helped PSG Insure to navigate adverse events such as the Western Cape storms and large fire claims, resulting in a net underwriting margin of 9%.
Commitment to growth
PSG said it remains committed to long-term growth, reflected in its continued investment in technology and people. During the period, the group’s technology and infrastructure spending increased by 20%, while fixed remuneration costs grew by 14%. The company also made significant strides in talent development, with 77 newly qualified graduates joining PSG in the past six months.
The group’s capital cover ratio strengthened to 286% (2023: 240%), exceeding the regulatory minimum of 100%. This improvement was driven by refinements to capital calculation methodologies, including the adoption of Basel regulations.
Additionally, Global Credit Rating Company reaffirmed PSG’s long-term and short-term credit ratings at A+(ZA) and A1(ZA), respectively, with a positive outlook.
The company’s strong cash flows enabled it to repurchase and cancel 11.2 million shares, optimising its capital structure.
Challenges and outlook
Despite the group’s success, Gouws acknowledged the broader challenges facing the South African economy, including stagnant growth, high levels of crime, and corruption.
However, he expressed cautious optimism about the country’s future, citing reduced disruption from loadshedding and the formation of the Government of National Unity. Although these developments may signal improving consumer and business confidence, Gouws emphasised the need for policy reforms and a legislative agenda that prioritises sustainable economic growth.
