Wierzycka stresses AI warning as Sygnia rallies on strong first-half results

Sygnia reported a 25.1% rise in after-tax profit to R216 million for the six months to 31 March.

Sygnia CEO and co-founder Magda Wierzycka has reiterated her warning about the dangers of AI, even as her company cautiously implements the new technology.

Wierzycka said during Sygnia’s half-year results on Monday that AI’s pace of innovation was unprecedented and that it was rapidly amplifying the digitisation sparked by the Covid-19 pandemic in 2020. Her comments came as Sygnia reported a 25.1% rise in after-tax profit to R216 million for the six months to 31 March, slightly outpacing the 24.3% revenue growth to R616.1 million.

Wierzycka reiterated her AI caution espoused in March, saying the world was being shaped by eight unelected men making decisions on behalf of the world’s roughly 8 billion people.

“These are the CEOs of Anthropic, OpenAI, Google, Meta, Nvidia, SpaceX/xAI, Amazon and Microsoft,” she said in reference to CEOs of the world’s foremost technology companies.

“As much as AI enhances productivity, it is also expected to cause massive job displacement, erode data privacy, and increase vulnerability to cybercrime, among other issues. AI agents, or digital workers, are expected to significantly reduce demand for many entry-level roles across a wide range of industries over the next two to three years, and examples of AI agents acting autonomously are multiplying.

“The AI investment theme has dwarfed any concerns about the economic impact of political disruption. We will likely soon learn that strong GDP growth, fuelled by infrastructure spending, can coexist with rising unemployment.”

Despite Wierzycka’s cautious tone on AI, Sygnia’s interim results acknowledged that the group is now “increasingly exploring and cautiously implementing AI strategies”, though it said staff would remain its ambassadors with technology as the “enabler”. This is in contrast to her March comments on AI, in which she told a Sandton investment conference that the technology was bringing nothing good to the world.

Monday trading saw Sygnia’s share price rally 3.7% to R33.50 by lunchtime on the back of a 22% rise in basic and headline earnings per share to 138.1 cents for the half-year. The declaration of an interim dividend of 122 cents per share from income reserves also helped, with the distribution being 24.5% higher than the 98 cents declared for the prior corresponding half-year.

Sygnia’s interim results also showed that while its main strategy remained organic growth, it was potentially looking at acquisitions to expand, following a half-year period that saw institutional outflows undermine market growth that boosted the value of its existing assets.

Assets under management and administration grew 13.6% to R460.8 billion in the period despite net outflows of R8.4 billion caused by the termination of a large investment administration mandate by a client acquired by a competitor. These outflows were mostly offset by the R8 billion market appreciation of existing assets.

The Sygnia Umbrella Retirement Fund saw notable growth, with assets rising to R23 billion from R18.1 billion at the end of the prior half-year, while membership increased to 77 757 from 68 315 over the same timeframe.

The Cape Town-headquartered asset manager said its retail business remains a crucial pillar of growth, attracting net inflows of R1.9 billion in the half-year, only slightly lower than the R2 billion in inflows reported at the end of the prior corresponding half-year.

The bulk of these flows were into the Sygnia Skeleton product range of balanced index tracking funds, which now have more than R17.5 billion in assets.