Post Office will look to banking for profit

Sapo is due to release its annual results in the next few months, which are expected to continue a six-year profit trend. Buick said the past financial year had not been without its challenges, particularly from the declining mail business, which still provides nearly 70% of its income.

Increased transport costs, its mandate to deliver mail to any address in the country, high staff costs and requirements that it increase postal outlets countrywide have also provided challenges.

"Our aim is to slowly reduce our dependence on the mail business until the financial services and banking sector take over," he said.

In the 2010 annual results, the revenue contribution from the mail business increased from 61% the year before to 69%, despite a decline of about 6% in mail volumes.

The increase came from new mail streams set up in the last few years, such as safemail.

Sapo hopes to achieve a ratio of 60% income from financial services and 40% from mail in the future.

Buick said Sapo planned to apply for a banking licence by the end of the year.

"With a licence we would be regulated, which would bring its own set of challenges, but from a business perspective it would mean we could grow our offerings to the public. At the moment we are strictly a savings bank," he said.

The Post Bank has seen the most growth in the peri-urban area. Its most popular account is the Smart Saver, which uses a saving book.

The range of postal outlet-based financial services has increased, with clients now able to pay licences, bills, claim grants and invest in share schemes offered by the likes of MTN and Sasol. Mr Buick said Sapo aimed to grow this business further.

Buick's term as chief financial officer has come to an end.

However, he plans to stay on in the organisation.

He hopes in the next five years to see a corporatised Post Bank that services a sector largely neglected by other banks, along with a strong logistics business and an increase in its financial service offerings.

Source: Business Day