Letshego profits flat on weak economic growth
Pauline Dikuelo | Tuesday September 6, 2016 15:12
According to group managing director, Chris Low the profit before tax was generally flat on period but the loan book registered a minor growth. Presenting the company results last Friday, Low said the group’s operating income increased by 10% which reflected the underlying growth in advances to customers which he said was supported by stable interest margins, cost of funding and cost of credit risk. He said the quality of their loan book remained at targeted levels noting that loan loss ratios remained less than three percent while they continue to increase their coverage.
“In Letshego’s home market, Botswana household improvement loans now make up six percent of the loan portfolio,” said Low. The group’s loan growth was nine percent and 22% in local currency.
The depreciation of local currencies continued to have an impact on the translated results with a further P297 million reduction in shareholders’ equity.
“There is little liquidity in the Botswana market, but we believe the market has the potential to grow hence why we intend to broaden what we can offer. The country still contributes 30% of the total group’s portfolio,” said Low. Further, he said the group is continuing to seek deposit-taking licences enabling Letshego to expand its customer solutions offering through savings and transactional accounts, providing money transfer, bill payment and remittance services as well as facilitating borrowings for micro and small enterprises for their productive needs. “Letshego continues to grow in its existing territories and diversifying into new African markets. The expansion is underpinned by the continued investment in people, systems and capabilities,” he said.
In addition, he said they continue to seek opportunities for further diversification of the business where there are financial inclusion imperatives and a need for productive lending.
Low said they have remained committed to extending their footprints into rural locations where access to financial services remain limited whilst also continue to grow and extend their market reach of their lending business.
Further, he said a pilot of a technology-driven agency banking model that uses biometric authentication to onboard customers and provides simple saving and loan solutions has commenced in Mozambique. “Its key benefits are simplicity as an account can be opened in three easy steps and lower service cost as is solar powered thereby making it easy to deploy in rural areas,” he said. The first six months of 2016 saw continued progress on Letshego’s strategy. During the period good progress was made in integrating the 2015 acquisitions in Tanzania and Nigeria into the Letshego Group, both of which are deposit-taking, and have platforms which support the group’s inclusive finance strategy.
Letshego now has a number of third party agents in Tanzania through a strategic partnership with a local agency and these are expected to increase. Further, Letshego Mozambique and Rwanda are now live with U.S dollar mobile banking and debit cards will be introduced in the coming months.
Letshego operates in 10 countries across Southern, Eastern and West Africa.