Cape Town - Short-term indications were that 2002 would be a difficult year for Sanlam and it the financial services group would be stretched to reach its target of 10 percent or more of real earnings growth, chief executive Leon Vermaak and chairman Ton Vosloo said in the 2001 annual report.
A number of building blocks had been put into place domestically to achieve that target, they said. These included the new solutions launched last year, including the Cash Management Fund, the Halala Savings Plan, International Endowment initiative and Direct Axis credit facilities, which would enable Sanlam to gain market share.
The merger last August of Sanlam Personal Finance and Sanlam Employee Benefits into Sanlam Life - to meet growing demand for individual choice in employee benefits - was already paying dividends. The smooth merger culminated in the launch of new life and investment products by Sanlam Life in the latter part of the year.
Sanlam Private Investments, following the acquisition last year of the major portion of the local private client business of Merrill Lynch, had become one of the biggest private client managers in the country and was expected to make a meaningful contribution to group growth.
Other structural changes over the past year included the sale of Sanlam Health to Medscheme and the division of Gensec Properties and Sanlam Properties Asset Management, with the latter now incorporated under Sanlam Investment Management.
The group had embarked on a new programme to implement co-operation and cross-selling between all its businesses. This move was expected to result in an immediate improvement in operating profit.
To provide banking products, the group could either build or buy. There were a number of options to buy, which could have included insourcing bank products or buying a bank.
"The buy option may or may not include Absa as other buy options could also be considered," Vermaak and Vosloo said.
"Given the unsatisfactory events in sectors of the banking community towards the end of 2001 and early this year, we have decided to place greater emphasis on building our own banking products in the short term."
Sanlam was instead pursuing the development of Innofin's differentiated cash management fund for transactional capability and its existing insourced private loan products for selected existing clients.
However, the options available for full access to banking products would continue to be assessed, they said.
In its past financial year Sanlam increased attributable earnings to R4 billion from R2.2 billion, while the embedded value of new business increased 21 percent to R290 million.
The share price rose a healthy 5.36 percent to R8.85 last Friday.