Finbond liquidity, cash flow position resilient

JOHANNESBURG – Finbond has warned that the Covid-19 pandemic and national lockdowns will result in a global economic downturn that will have an adverse impact on sales volumes and revenue – and potentially collection rates and asset valuations.

Finbond, South Africa’s leading mutual and savings bank, said in its financial statements for the year ended February 29, that the decrease in global economic activity and reduced trade brought on by measures to stem the spread of the pandemic would likely lead to higher unemployment, lower gross domestic product (GDP) numbers in the US, Canada and SA.

“This will be partly offset by the significant stimulus, support packages and adjustments to fiscal and monetary policies that governments around the world have implemented in response to the crisis,” said the group.

Finbond expected that the Covid-19 pandemic would impact the group’s profitability for the year ending February 28, 2021, as lockdowns would likely prevent customers from spending on non-essential items.

“This will lead to lower sales credit extension and hence revenue. This will be accompanied by higher unemployment as businesses put measures in place to survive, as well as by actual business failures. This will in turn impact customer affordability, resulting in client’s qualifying for smaller loans, or not qualifying at all,” it said.