Johannesburg - The South African Post Office (Sapo) has finalised plans for the corporatisation of its financial services unit, Postbank, which could see it expanding its services to loans and credit.
Postbank is currently a division of the Post Office and houses around two million Mzansi accounts, which equates to around half of the total market.
The division will be transformed into a wholly-owned Sapo subsidiary towards the end of next year, which will be facilitated by a change in legislation known as the Postbank bill.
"There is no intention of privatisation on the table. The bank will remain 100% owned by government and operated on their behalf by the Post Office," said Sapo CEO Motshoanetsi Lefoka, who was speaking at the presentation of the group's annual financial results on Tuesday.
"The significance of this change is that we can now offer a wider range of services. Postbank can only take deposits now, so we will be looking at credit and loans in the future," said Nick Buick, chief financial officer of Sapo.
"It won't happen next year, though. We will focus on the corporatisation process in 2010," he added.
The number of Postbank deposits increased by 14% to R3.3bn during the 2009 financial year.
Tough trading conditions
Although revenue was 8% higher at R6bn during the year under review, Sapo reported a 14% decline in pre-tax profit at R488m. The institution said that the decline in profitability was as a result of the tougher trading environment.
The division worst hit by the crisis was courier and freight business, which makes up for 12% of total revenue. Its pre-tax profit plummeted 234% during the period, after many of the Post Office's big corporate clients cut back on freight services.
"These are many of the big retailers like Pick n Pay and Shoprite. They have also had to pull in their horns because of the crisis," said Buick.
Sapo also faced a 10% increase in costs at its biggest division - postal services, which makes up 63% of total revenue.
The main costs in this business unit are fuel and wages. The former increased by an average of 23% year-on-year over the period. Wages increased by 11% during the same period.
Sapo remained strongly cash generative during the 2009 year. The company's cash flow from operations more than doubled to R650m.
It spent R250m on capital expenditure projects in the past year. A further R500m is earmarked for both the 2010 and the 2011 financial year.