Letshego shelves plans to open bank in Botswana
Boitshepo Majube | Wednesday April 30, 2014 12:48
In 2012, Bank of Botswana declined Letshego’s banking licence application for reasons, which the microlender says, were not explained.
Letshego has already acquired banking licences in Mozambique, a deposit-taking licence in Rwanda, and is in the process of acquiring a banking licence in Namibia.
Briefing the media on the company financial results for the year ended January 2014 in Gaborone yesterday, managing director Chris Low, said they are gaining experience from their African operations, and by the time they re-apply for the banking licence locally they would have acquired enough experience.
“When we applied before, we had no deposit taking capability, but now we have as in other African countries we are operating in, we do take deposits,” Low said.
Asked about when they think they will be ready to re-apply for a licence, Low said it would be in the short to medium term.
For the first time since inception, Letshego generated the lion’s share of its profits from outside Botswana as the group reaps dividends from its aggressive geographical diversification efforts.
The group’s financial results for the year ended January 2014, Low said more than half (58 percent) of the company’s profit before tax was generated outside Botswana from 40 percent in the previous period.
In the group’s 16-year old history, Botswana has consistently contributed the majority of the microlender’s profits but expansion into new markets, including the East African region has not diversified the group profit and asset mix but significantly cut down Botswana’s contribution to the stable.
In 2008, a mere eight percent of Letshego’s profits were generated from outside Botswana before increasing to 35 percent in 2012 and 40 percent in the year ended January 2013.
From its traditional three markets in Southern African, Letshego now operates in ten African countries after aggressively expanding operations in the past five years to open shop in countries such as Mozambique, Lesotho, Kenya, Rwanda, South Sudan, Tanzania and Uganda.
In the period, profit growth was flat year on year increasing by one percent to P849 million on prior year, which the group says was a result of the pressure on margins, various strategic investments in technology and group expansion initiatives. Earnings per share are lower due to the conversion of a loan to equity earlier in the financial year.
Net interest income rose by 15 percent at the back of a 43 percent decline in interest expense. Impairments surged by 84 percent to about P64 million. On the balance sheet, total advances soared by 33 percent to P4.43 billion contributing to a 16 percent increase in total assets. In the period the board declared a 3.2 thebe to be payable on 9 May 2014.
“During a challenging year, a satisfactory performance was achieved in terms of growth in the advances book with the main contributions coming from our three largest markets, Botswana, Namibia and Mozambique.
“The quality of the advances book was within target levels with an impairment charge on the net portfolio of 1.7 percent for the year as compared to 1.3 percent in the prior year.
“The group remains well capitalised and has cash resources of over P300 million which are available to further grow the business,” said Low.