Letshego obtains Tanzanian banking licence
Isaac Pinielo | Friday September 11, 2015 14:18
Since April this year, the microlender has been running a series of cautionary notices stating that it has agreed to become a 75 percent shareholder of a deposit-taking financial institution that specialises in micro finance by way of subscription for new shares.
The company management stated in a commentary accompanying the group’s consolidated results for the six-month period ended June 30, 2015 that the approval leaves just one final regulatory approval to start deposit-taking in Tanzania.
“Thereafter, once all other conditions precedent have been completed this will add a further deposit-taking entity to the Letshego group adding five customer access points and over 20,000 customers,” said Chris Low, Letshego group managing director.
He noted that this, when combined with Letshego’s existing business in Tanzania, will position the group as one of the leading financial services organisations in Tanzania over time.
According to Low, Letshego’s strategic intent is to build a leading African financial services group, adding that the company continues to seek deposit-taking licences and that this will facilitate the group’s financial inclusion agenda.
In July last year, the group was granted a provisional licence by the Bank of Namibia as an authorisation to establish a banking institution. The Namibian licence is the third one following two other deposit taking licences that were granted in Mozambique and Rwanda.
However, the Bank of Botswana rejected the group’s application for a licence in Botswana.
Meanwhile, the group has reported strong results for the half-year period ended June 30. Profit before tax increased by three percent to P522 million from P508 million for the same period last year, while profit after tax increased by eight percent to P402 million from P373 million last year.
The group’s loans to customers grew by 16 percent to P5.8 billion. Cost to income ratio was stable at 28 percent and impairment charges were 2.5 percent on average net advances.
Cost of borrowings remained consistent with prior periods.
However, Low stated that interest expense includes foreign exchange losses on open inter-group positions of P50 million.
He added that a lower than normal tax charge was recorded following the resolution of some historical tax assessments from certain tax authorities.
“If the impact of the foreign exchange losses were excluded, the underlying growth in profit before tax would have been 13 percent,” he said.
The managing director further said the group’s underlying performance was good with interest income increasing by 10 percent and strong growth in non-interest income. He added that Letshego remains well capitalised with a capital adequacy ratio of over 60 percent and cash resources of over P283 million.