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Interim Results
Letshego Holdings Limited
Incorporated in the Republic of Botswana
Registration number 98/442
(“Letshego Holdings” or “the Company”)
The Board of Directors of Letshego Holdings Limited (“the Group”) is pleased to
present an extract of the reviewed consolidated results for the six months ended
30th June 2016.
CONTINUED PROGRESS ON DELIVERY OF THE STRATEGIC AGENDA UNDERPINNED BY INVESTMENTS
IN THE BUSINESS
The Group continues to deliver on its strategic agenda towards creating a leading
African financial services group, with a focus on inclusive financial services.
Through its ten country presence across Southern, East and West Africa, its
subsidiaries provide consumer lending, micro finance and deposit-taking
solutions.
Key highlights of progress with delivery of the strategic agenda during the
period include:
Embrace financial inclusion: The Group continues to progress its inclusive
finance agenda. This includes engaging with various stakeholders and piloting
agricultural, educational and environmental lending projects in low risk pockets
of various supply chains in these sectors off Letshego’s balance sheet. These
are progressing well and early indicators are that sustainable commercial returns
are achievable over time.
Furthermore, the Group continues to seek deposit-taking licences – enabling
Letshego to expand its customer solutions offering via: 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. Subsequent to the period end, Letshego Namibia was awarded a full
deposit taking license by the Central Bank of Namibia. Also FBN MFB Nigeria and
Advans Bank Tanzania were successfully renamed and rebranded to Letshego MFB
Nigeria and Letshego Bank Tanzania respectively. The Group now has five deposit
taking licenses.
Grow the franchise - invest and diversify: Letshego continues to grow in its
existing territories and diversifying into new African markets in terms of
geographic, customer and solution mix. The expansion is also underpinned by the
continued investment in people, systems and capabilities. During the period good
progress was made in integrating the 2015 acquisitions in Tanzania and Nigeria
into the Letshego Group. In Letshego’s home market, Botswana, household
improvement loans now make up 6% of the loan portfolio. Similar initiatives are
being pursued elsewhere in the group and the consumer lending segment is now 89%
of the overall loan portfolio with MSE at 11%.
Enhance the customer experience and deliver simple, appropriate and affordable
solutions: The Group continued investment in people and systems has enabled
Letshego to strengthen its operating capability. Mozambique and Rwanda are now
live with USSD mobile banking and cards will be introduced in the second half of
2016.
Furthermore a pilot of a technology-driven agency banking model that uses
biometric authentication to on-board 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. Further enhancement of
existing solutions to ensure market relevance continues.
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Embed the future capability model and provide Access, Anytime Anywhere:
Enhancements to customer access points continue across the Letshego footprint and
are important in ensuring exceptional customer experience. For example we have 55
third party agents in Tanzania through a strategic partnership with a local
agency - these are expected to increase. The use of mobile money is well
established in Kenya and continues to perform very well, with additional
opportunities to expand the use of our USSD driven access currently being
explored. Letshego is also developing agency and mobile banking, payment services
and internet banking solutions, with Mozambique, Namibia, Rwanda and Tanzania at
the forefront.
Growth, Performance and Returns
- Total revenues exceeded P1 billion
- Profit before tax of P489m
- Interest income increased by 11%
- Cost of borrowings remained stable at 10.5%
- Staff and operational expenses increased by 51% reflecting our continued
step up of our capabilities
- This resulted in the cost to income ratio increasing to 38%
- Cost of credit risk at 2.2% remained within target levels
- Return on Assets of 11%
- Return of Equity of 19%
- Dividend of 9 thebe per share retaining a 50% dividend pay-out ratio
- Gross loans and advances to customers increased by 9%
Analysis of the results for the period
This period’s results show satisfactory growth in an environment of depreciating
exchange rates, higher inflation and interest rates and lower economic activity
in most of the markets in which Letshego operates.
Loan growth was 9% in BWP terms and 22% in local currency. The quality of the
loan book remains at targeted levels. Loan loss ratios remained less than 3%
while we continue to increase our coverage ratios. An additional provision was
taken for potential Mozambique sovereign default risk. The level of customer
deposits fell slightly mainly due to the maturity of some corporate deposits.
Borrowings remained flat from the year end however a funding pipeline is in place
to support the business going forward.
The depreciation of local currencies continued to have an impact on the
translated results with a further P297m reduction in Shareholders’ equity.
Nonetheless, the Group remains well capitalised and profitable.
Profit before tax of BWP489 million was generally flat period on period.
Operating income increased by 10% which reflected the underlying growth in
advances to customers and was supported by stable interest margins, cost of
funding and cost of credit risk. However, the growth in income was lower than
the growth in costs which resulted in a higher cost to income ratio and flat
profitability. The Group continues to invest in human capital and
infrastructure in support of its strategic growth agenda and long term plans for
the business. It is acknowledged that the interim period cost to income ratio is
higher than targeted levels of 35% and is expected to revert to more normal
levels over time.
Board of Directors
Enos Banda was appointed to the Board during August 2016 as a new independent
Non-Executive Director (NED). This brings the number of Directors to eleven of
which seven are independent NED’s.
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Auditors’ review
The financial information set out in this announcement has been reviewed but not
audited by PwC, the Letshego Group’s external auditors. Their unqualified review
report is available for inspection at the Group’s registered office.
Prospects
Letshego continues to drive its inclusive financial services strategy and to
strengthen its operations through investment in people, technology and strategic
partnerships. The Board of Directors is confident that the Group is well
positioned to benefit from the growing markets in which it is active and views
inorganic expansion via strategic acquisitions as important to the acceleration
of Letshego’s strategy. As such, it will continue to seek and review relevant
opportunities for the Group to pursue.
Dividend notice
Notice is hereby given that the Board has declared an interim dividend of 9 thebe
per share for the period ending 30 June 2016. In terms of the Botswana Income Tax
Act (Cap50:01) as amended, withholding tax at the rate of 7.5% or any other
currently enacted tax rate will be deducted from the interim gross dividend for
the period ended 30 June 2016.
Important dates pertaining to this dividend are:
- Declaration date, 31 August 2016
- Last date to register, 16 September 2016
- Dividend payment date on or about, 23 September 2016
For and on behalf of the Board of Directors:
J A Burbidge A C M Low
Group Chairman Group Managing Director
GABORONE, Thursday, 1 September, 2016
An extract of the unaudited reviewed financial statements of the group can be
downloaded from http://www.letshego.com/financial_results.php
Debt sponsor in South Africa
The Standard Bank of South Africa Limited, acting through its Corporate and
Investment Banking division
Sponsoring broker in Botswana
Stockbrokers Botswana Limited
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