Letshego Holdings Limited, owners of AFB finance house in Ghana has announced financial results for the first half of 2018, affirming solid performance across key areas of the business.
Highlights include double digit growth for the group’s profit before tax as well as gross loans and advances, compared to the same period last year.
Profit before tax was up 19 per cent to BWP590 million, (about $54 million) with gross loans and advances increasing 12 per cent, to BWP8.7 billion (about $796 million).
Operating Income increased by 15 per cent following the expansion of various strategic initiatives, including agency banking, mobile digital platforms, strategic partnerships, cross selling and the launch of new solutions in select markets.
Operating Costs increased by 17 per cent, which included BWP10 million (about $915,000) in once-off costs following a write down of redundant IT equipment as the Group prepares to migrate to a cloud environment.
Profit after tax
A higher effective tax rate of 38 per cent resulted in a lower increase in profit after tax for the period of 11 per cent.
Impairment provisions increased 37 per cent following the implementation of new accounting standards, ‘IFRS 9’ as of 1 January 2018.
This meant a BWP150 million (about $13.7 million) decline in the group’s retained earnings and an increase in impairment provisions from BWP402million from BWP552 million ($50.5 million).
IFRS 9 has also resulted in an increase in the group’s Coverage Ratio to 95 per cent. Positively, Letshego Group’s loan recoveries continue to improve, however Nigeria, Tanzania and Uganda experienced an increase in impairments this first half of 2018.
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.
Strategic agenda highlights
Letshego continues to make good progress with its diversification strategy into nongovernment segments across markets, with access remaining a core priority as the group centres 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.
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 per cent of the total loan portfolio.
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 per cent.
Cards, the Group’s most recently launched channel, is achieving positive progress in roll out to customers in Namibia, Nigeria and Tanzania.