SARS’ R44.52 million penalty swings state-owned bank into a R5.23 million loss

Postbank reported a R44.52 million interest charge from the South African Revenue Service (SARS) in the 2025/26 fiscal year. 

This is the first time in four years that Postbank incurred penalties from SARS, with the bank saying this single item prevented it from reporting a R42 million before-tax profit.

A closer look at the bank’s performance reveals that its margins were slim to begin with.

Postbank’s results for the 2025/26 financial year showed that the state-owned bank swung from a R94.07 million profit in 2024/25 to a R5.23 million loss.

The bank made it clear in its report that this dramatic swing to a loss was solely due to a R44.52 million “SARS-related interest charge”.

It said that, without this charge, the bank would have reported a profit before tax of R42 million.

Postbank’s acting CFO, Morongwa Sereto, said this demonstrates the strength of the bank’s underlying business performance and management’s continued focus on prudent financial stewardship and cost discipline.

She said this is despite significant strategic and regulatory investment requirements during the year.

“This context is important in understanding the underlying performance of the business,” Postbank CEO Nikki Mbengashe said.

The SARS bill was clearly a surprise to Postbank, as it differed markedly from tax-related charges in previous years.

From 2021/22 to 2023/24, Postbank never incurred interest penalties payable to SARS. In fact, it earned interest in those years.

In the 2024/25 financial year, Postbank’s interest accrued to SARS was R0. Therefore, the R44.52 million penalty seen in 2025/26 was unusual.

However, even if the SARS bill had not occurred and Postbank had posted a R42 million profit, it would still have represented a dramatic financial decline.

Postbank’s profit slip

The Postbank’s margins in 2025/26 were slim to begin with, even without the SARS interest charge.

Excluding the R44.52 million SARS bill, Postbank’s pre-tax profit would be R41.99 million.

After accounting for normal current/deferred tax expenses, the bank’s net profit after tax would be R39.3 million.

This represents a 58.22% decline from the R94.07 million net profit after tax recorded in 2024/25.

Sereto attributed this decline to a reduction in transactional and fee-based revenue, additional tax-related costs, and “continued investment in building the bank’s future capabilities”.

Postbank’s net fee and commission income halved in 2025/26, dropping by 56.7% to R60.4 million.

This decline was driven by a Variation Notice restriction from the Reserve Bank, which barred Postbank from issuing cards to existing core depositors or onboarding new customers.

Postbank’s net interest income also dropped, though less dramatically, by 6.35% to R646.9 million. This was due to lower market interest rates and lower interest-earning yield.

The “continued investment” mentioned by Sereto was in reference to Postbank’s increased operating expenses in 2025/26.

The bank recorded R728.5 million in operating expenses, marking a 3.39% increase from the previous year.

This increased spending funded platform modernisation, software licenses, employee costs, and card replacement operations.

Sereto noted that these negative factors were partially offset by a strong recovery in credit impairments. 

Postbank recognised a R58.9 million credit loss reversal in 2025/26, up 303.43% from R14.6 million in 2024/25. This was largely due to capital repayments from Land Bank. 

Without this reversal, Postbank would have posted an operational loss before tax, even without the SARS penalty.

Mbengashe alluded to the need for financial improvement, saying that the bank should recognise “that we must continue to build a stronger and more diversified revenue base”.

On top of this, she noted that Postbank must improve its efficiency and convert its significant customer reach into greater customer utilisation and sustainable commercial value.

This “significant customer reach” stems from Postbank’s history of disbursing social grants to 7.1 million beneficiaries.

“As we enter the next phase of our journey, our focus is firmly on Build for Growth. The foundations are increasingly in place,” she said.