Home » News » Business » Letshego rakes in p590 million before tax

Letshego rakes in p590 million before tax

Publishing Date : 10 September, 2018

Author : REARABILWE RAMAPHANE

Botswana conceived Pan-African financial group Letshego Holdings Limited announced its financial results for the first six months of 2018, mirroring a sound and satisfactory performance across its spread African footprint.


Key financial highlights indicate that the Botswana Stock Exchange (BSE) listed financial outfit raked in an impassive double digit growth on its profit before tax as well as gross loans and advances, compared to the six month ended June 2017. Profit before tax expanded by 19 percent to P590 million, with gross loans and advances growing by 12 percent, to P8.7 billion against to the half year ended June 2017.


Operating income increased by 15 percent following expansion of various strategic initiatives being; agency banking, mobile digital platforms, strategic partnerships, cross-selling and the launch of new solutions in select markets amongst others.  Letshego told its stakeholder on Monday that operating costs for the period under review increased by 17 percent, which included P10 million in once-off costs following a write-down of redundant IT equipment as the Group prepares to migrate to a cloud environment.    


Letshego executives explained that however a higher effective tax rate of 38 percent resulted in a lower increase in profit after tax for the period, the latter only moved up by 11 percent.  The company also dealt with impairment provision increase of 37 percent following the implementation of new accounting standards, ‘IFRS 9’ as of 1 January 2018.


 Letshego  Group  Chief Financial Officer (CFO), Colm Patterson  explained that this meant a P150 million decline in the Group’s retained earnings and an increase in impairment provisions from P402 million to P552 million during the 2018 first half. He said IFRS 9 has also resulted in an increase in the Group’s Coverage Ratio to 95 percent. Patterson is currently overseeing Group operations in the interim while recruitment is ongoing to find replacement for Chris Low who resigned last month after 5 years of leading the BSE listed Group.


He highlighted that on another positive note Letshego Group’s loan recoveries continue to improve with exception of Nigeria, Tanzania and Uganda business which experienced increase in impairments during the period under review.  “The Group continues to see gradual growth in deposits, with Mozambique and Rwanda seeing greater momentum in deposits than other markets in the Group’s footprint, Letshego’s ongoing success in forging strategic partnerships, rolling out our LetsGo solution in select markets and mobilizing our focus and strategy continues to deliver dividends,” shared Letshego CFO.


Patterson revealed that borrowing customers have increased by more than 50% and deposit customers have doubled over the same period.  “Although deposit customer growth remains at a low base, we hope to maintain this momentum for the second half of the year,” he said.
 Colm explained that Letshego continues to make good progress with its diversification strategy into nongovernment segments across markets, with access remaining a core priority as the Group centers its focus on enhancing customer value.


 “More specifically, Ghana and Tanzania have made the most progress in extending solutions to informal segments.  Following Letshego Ghana’s launch of ‘Qwikloan’ late 2017, in partnership with MTN Ghana, more than 2.5 million loans have been disbursed to over 600,000 customers” he added.  “Letshego’s Affordable Housing and Education Eco-System solutions remain key drivers of growth in the Group’s MSE (Micro and Small Entrepreneurs) loan book, together the two solutions constitute 6% of the total loan portfolio.”


Patterson explained that in support of Letshego’s financial inclusion agenda, the Group remains focused on increasing digital access channels, as opposed to adding more physical outlets to its regional footprint. “Digital channels include USSD, Agency Banking, Direct Sales Agents and Cards. In the first half of this year, Letshego has doubled the number of independent agent access points, and increased USSD registrations by more than 50 percent Cards, the Group’s most recently launched channel is achieving positive progress in roll out to customers in Namibia, Nigeria and Tanzania,” he said.


Letshego continues to reduce its dependence on bank loan funding by issuing notes off existing DMTN programmes in active domestic debt capital markets.  Ghana recently issued GHS95 million (about P221 million) of new notes with 5, 6 and 7 year maturities, with all issuances being oversubscribed.  


 Letshego Ghana obtained approval to increase its DMTN Programme limit by GHS200mn. Three new bonds with a face value of GHS95million were issued in the first half of the year, maintaining a stable bond rating of BBB+(GH) from Global Credit Rating (GCR) - three notches above investment grade.  The Group’s credit rating from Moody’s remains unchanged.    


This first half also saw conclusion of P256million of funding from international investors.  New funders include development finance institutions, investors who focus on micro and inclusive finance ventures and impact investors.  “Most of these newer finance partners are headquartered in the UK and Europe, all with a keen interest in sustainable development in Africa. 


The funding arrangements mentioned above are expected to deliver treasury benefits and mitigate funding risk for the Group by achieving geographical diversification in its funding base, increasing the current number of funders, securing longer tenors as well as reducing the Group’s overall open foreign exchange exposure by drawing new local currency-denominated facilities,” explained Colm Patterson


He echoed that Letshego Group remains on track and committed to its current strategy of increasing access to simple and appropriate solutions across its 11 market footprint, leveraging digital technology and strategic partnerships - ultimately achieving our collective objective in increasing financial inclusion across Africa.

Cartoon

Polls

Do you think the courts will help put the UDC, BMD impasse within reasonable time ahead of the 2019 General Election?

banner_14.jpg
banner_12.jpg

POPULER BRANDS