Financial services group Finbond Property Finance on Friday reported that its diluted headline loss per share for the year ended February 2009 was at 1.0 cents from the 22.9 cents profit reported the previous year.

Operating profit was at R22.9 million, down from the R87.3 million reported before.

Loss for the period was R57.7 million from a profit of R62.7 million before.

Finbond said that South Africa's economy shrank by an annualised 6.4% quarter-on-quarter in the first three months of 2009, far worse than the 3.9% expected by the market and the biggest fall in 25 years, confirming the first recession since 1992.

It said that in the context of this recessionary environment where the scale and suddenness of the economic downturn had left economic forecasters scrambling to keep up, the group achieved satisfactory trading results for the twelve months under review; the result of sustained progress in the execution of the Group's diversification strategy out of the mortgage origination industry.

"The year ending February 2009 was an extremely difficult and challenging period that was brought about by adverse market conditions and a significant decrease in the rate at which banks are approving the mortgage applications submitted by Finbond's Mortgage Origination division," the group said.

Finbond said that due to the repositioning of the Group in the Micro Finance market, the company's positioning with Strategic Funding Partners FMO and Standard Chartered Bank, innovative product design and development, long-term funding versus a short-term lending product, strong liquidity position, cost containment and significant national distribution channels, it was well positioned to weather the current storms.

"It remains our strategy to focus on the further expansion of our Micro Finance Division. The expansion of our Micro Finance activities will ensure medium- and long-term sustainability.

To this end, during the twelve months under review, Finbond expanded its Micro Finance branch network from 101 to 180 branches. We also acquired branches in Namibia and Botswana. Our African expansion is on track and on schedule," said Finbond.

"Despite the major challenges facing Finbond in the current business environment, we remain committed to the Group's principle objective of maximising shareholder value."

Finbond said that it now had a sound platform and strategic base in the Micro Finance market from which to grow.

It said that the focus for the year ahead would be bedding down the various acquisitions in the micro finance market, further diversification into the micro finance market, funding, optimal capital utilisation, operational efficiency and further rationalisation of its mortgage
origination division.

Looking ahead, the group said that the challenging macroeconomic environment, recession in South Africa, and adverse market conditions were not expected to abate for the year ahead and would continue to impact extremely negatively on Finbond's Mortgage Origination Division.

"Although confident that we have the required resources and depth in management to successfully confront these challenges, market conditions in general, and in particular further declines and potential losses in our mortgage origination business could have a negative impact on the performance during the year ahead.

"We believe that the continued expansion into the Micro Finance market in the implementation of our strategic action plan will ensure that we achieve results in the medium and long term," it said.

When the JSE closed, shares in Finbond were unchanged at 28 cents.

Source: I-Net Bridge