The 2021 financial year was exceptionally difficult for this division. Notwithstanding the negative impact of the pandemic and the cautious approach to accounting for expected credit losses, the division executed a very strong second half turnaround, turning a 39% decline in trading profit at half year into a 9% full year increase in trading profit, which is commendable.
Costs were well managed. The division is operating in a demanding environment and while a recovery is expected, it will take time to materialise and is likely to be uneven.
Bidvest Bank's overall result remained adversely affected due to interest rate cuts resulting in lower interest yields, lower lending growth in fleet and personal and business banking, a decline in the lease asset book, significantly reduced foreign exchange trading income, while the fee and commission income was negatively impacted by low branch transactional income due to the reduced branch network. The Bank's balance sheet remains strong and liquid, and the key ratios are well above the South African Reserve Bank's minimum requirements. Deposits continue to grow.
The insurance cluster grew gross written premiums, mainly in the life insurance products.
Claims are stable and client retention has been very good. FinGlobal delivered a strong performance, resulting from the increasing immigration trend. Compendium faced a challenging market as did Bidvest Wealth and Employee
Benefits and TradeFlow. Compendium acquired Genesis Insurance Brokers and the investment portfolio performed well, with investment returns almost doubling on the prior year, boosting the cluster's results.
Automotive related policy sales were lower, but insurance products sold through the direct channel grew. FMI grew gross written premiums and successfully rolled out a digital client application process. Costs were well managed.
Looking forward
There is enhanced strategic focus on digital transformation and cross-selling across the entire range of products and services are being pursued with customers, which are expected to increase sales. Strategic alliances are being considered.
Meaningful fleet management opportunities are being assessed.
There is also a focus on new niche insurance products launches to grow the book, and a retention strategy to limit policy cancellations.
The lifting of international travel restrictions will significantly boost foreign exchange transactions.
