Homegrown pan-African microlender, Letshego Holdings weighed down the Botswana Stock Exchange’s (BSE) third quarter 2019 performance, shedding 41% over the three months.
According to Stockbrokers Botswana’s third quarter review released on Monday, the BSE’s Domestic Companies Index (DCI) lost P2.3 billion in value largely as a result of the fall in Letshego, which dropped by 59 thebe.
The DCI’s slide, seen since the beginning of the year, however, slowed in the third quarter at 2.12 percent compared to 3.34 in the second quarter. “The DCI reached a 12-month low of 7397.77 points in August, however it recovered over September to close third quarter at 7460.95,” Stockbrokers analysts noted.
Letshego’s share price collapse has run against the group’s solid performance, which saw it posting after-tax profits of P363.7 million for the six months ended June 2019.
For that period, net interest income rose by five percent to P9.11 billion, although the group did suffer a 10% increase in costs as well as an eight percent increase in impairments.
The group’s financial stability was also given the thumbs up by ratings agency, Moody’s which assigned Letshego a stable outlook recently.
Moody’s said it was expected that Letshego’s financial fundamentals would remain robust over the next 12 to 18 months despite elevated credit risks
“An upgrade of the company’s ratings would depend on Letshego successfully developing broader African financial services operations, while maintaining strong profitability and capitalisation and strengthening its liquidity profile,” Moody’s noted.
Signs of the unease behind the robust numbers came from major Letshego shareholder, BIHL which in two years running has adjusted the fair value of its investment, taking hits worth hundreds of millions of pula in the process.
In addition, several shock board resignations, including that of the newly appointed CEO, Smit Crouse, six months after his appointment, have rattled shareholders and hinted at problems beyond the numbers.
Earlier this year, BusinessWeek insiders said there was a lot of disgruntlement within management and the board, especially around the African growth strategy, combined with low staff morale.
Last year, after Crouse left, Letshego brought back Dumisani Ndebele to steady the boat as interim group CEO. Ndebele, a veteran executive with Letshego, who left the group in 2016 after 17 years, has since been joined by a new revised group executive.
Letshego has also said it plans to revise its African footprint, including possible exits.