Feeling the effects of a recession, property finance group Finbond posted a headline loss of 8.7c per share for the six months ended August.

This reflected a decline of 215.4% on the 7.5c per share earned for the previous comparable half-year.

"During the six months under review Finbond made good progress despite continued extremely challenging market conditions. This process resulted in a number of achievements and significant developments for Finbond," the group commented.

Net profit before tax, it said was up 8% to R38.6-million, while the annualised return on average equity of 30.2% represented an increase of 82.2%. Total assets also grew some 20.3% from R426.6-million to R513.4-million.

"The six month period ended 31 August 2009 has been pivotal for Finbond in terms of its evolving strategy of repositioning itself in the micro finance market, as well as the restructuring of the Mortgage Origination business.

"The Group continues to invest in infrastructure, people, training, information technology and systems, as well as in enhanced collection strategies and systems, to build a sustainable, professional business.

"We believe that doing the right things now, will allow us to reap the rewards in the medium and long term.

"Due to the re-positioning of the Group in the Micro Finance market and the company's positioning with Strategic Funding Partners FMO and Standard Chartered Bank, innovative product design and development, infrastructure spend, long term funding versus a short term lending product, strong liquidity position, cost containment, and significant national distribution channels, the Group is well positioned to weather the current storms," the group added.

But the group noted that the challenging macro-economic environment, recession in South Africa, and adverse market conditions are not expected to abate for the year ahead and will continue impacting extremely negatively on Finbond's Mortgage Origination Division.

"Although the Group is confident that we have the required resources and depth in management to successfully confront these challenges, market conditions in general, availability of funding for future growth, and in particular further declines and potential losses in our mortgage origination business, could have a negative impact on the performance of the Group in the year ahead," it stated.

However it added: "We are positive about our prospects for the future due to Finbond's:
- Management expertise;
- Liquidity position;
- Improved infrastructure after centralisation and Capacity Development;
- People;
- Current access to funding;and
- Untapped potential in the micro finance market.

"Finbond believes that the continued expansion into the Micro Finance market and the growth of our balance sheet in the implementation of our strategic action plan, will ensure that we achieve results in the medium and long term".

Source: I-Net Bridge