Solid and dependable PSG

Looking at the latest numbers from wealth management hub PSG Financial Services, it’s hard to find even a tiny fly in the ointment.

All the metrics were well up on the prior year, with headline earnings rising 35% and the dividend pushed up 25%. Return on equity has risen from 25% over the past decade and cracked the 30% threshold for the first time, no small feat for a business that has grown bottom line at 15% compound over the same period.

If anything, this proves that management has been able to find attractive growth opportunities to allocate capital to over the years. Another metric to note is that the shares on issue are actually lower in 2026 than in 2016, displaying strong discipline with shareholder capital.

Divisionally, things look sound. PSG Wealth, which contributed 57% to headline earnings, delivered a 17.3% increase in assets under management (AUM) from its network of more than 600 advisers across 265 offices nationwide. The uplift wasn’t just driven by the strong equity market returns seen over the past 12 months; advisers managed to attract net inflows of R25bn across the period. Headline earnings for this division were up 25% in 2026.

This division remains key to the PSG model, as it helps introduce clients to the remaining two divisions of PSG Asset Management and PSG Insure, where client needs are identified as part of the advice process. CEO Francois Gouws tells the FM that PSG Wealth is working with AI tools to improve operational efficiency and the quality of its service offering for both the client and adviser.

PSG is not a hyperscaling fintech business but rather a slow-and-steady-wins-the-race type of story

PSG Asset Management, which contributed 28% of headline earnings, delivered a stellar performance, as expected given equity markets’ performance over the past year, especially in South Africa, where the JSE all share index rose for 14 consecutive months from January 2025 to February 2026.

AUM shot up 38% through a combination of market returns and net inflows of R5bn. Performance fees also rose notably, constituting 9.2% (2025: 3.7%) of headline earnings, again not a surprise given the strong market. Headline earnings at a divisional level were up a staggering 59% in 2026.

PSG Insurance, accounting for 15% of group headline earnings, delivered what might be considered a pedestrian result compared with the other two businesses, but that might be somewhat disingenuous given the economics of this division relative to the others. Insurance delivered a solid result with gross written premiums up 5% and underwriting margins well up from 2025, increasing from 12.7% to 15.1%.

The division focuses on commercial lines of business, where its 335 insurance advisers can deliver expert insights and advice akin to the style of relationships seen in the wealth business, which should mean stickier customers over the longer term. Headline earnings for this division were up 22%.

PSG is not a hyperscaling fintech business but rather a slow-and-steady-wins-the-race type of story with some nice tailwinds behind it. First, Gouws estimates it has about 5% market share, leaving it significant room for growth either by taking market share or holding its own in a market that is still growing.

Financial services have been one of the growth sectors of the economy, driven by structural reforms over the past decade around retirement products, tax-free savings accounts and the relaxation of foreign exchange rate controls, all of which have opened up conversations with clients and opportunities for PSG’s wealth and asset management divisions.

The recent changes to the budget, which affect a raft of allowances, tax credits and bands, while not having an immediate impact, do help PSG customers at the margin in keeping more of their accumulated wealth over the long term. PSG also has a long-standing approach to training and bringing through talent internally rather than acquiring other practices to supercharge growth.

PSG remains robustly capitalised, with regulatory reserves at 260% (the minimum is 100%) and a credit rating of AA-, having received another rating upgrade in the past financial year. The firm’s credit rating has moved from BBB+ to AA- over the past decade, reflecting the strong and improving performance of its underlying businesses.

The group operates with a corporate debt-free balance sheet; this, combined with its current credit rating, leaves it in an excellent position to take on any required debt at attractive rates should a sizeable growth opportunity present itself.

With such an excess of capital, a special dividend might be possible. But the company prefers to keep a fortress-like balance sheet, which should give investors and customers plenty of peaceful sleep at night.

Many investors like to build an investment portfolio around a few core stocks with some more speculative satellite stocks on the edges. Given PSG’s track record over the past decade, it may be worthy of review as a core stock component within any investment portfolio.