• Eight percent increase from previous period
• Interest income up 10%
• Non-interest income up 55%
• Trades 1.4 million shares daily; best in liquidity
Letshego Holdings Limited Group on Friday announced its financial results for the six month period ended 30 June 2015, showing an increase of eight percent in profit after tax to P522 million.
The group Managing Director Chris Low said the deduction from source remains the core driver of the group’s interest income which grew by 10 percent.
Non-Interest Income increased by 55 percent from the previous period to arrive at P202 million and is attributed to the efforts being made by the group to diversify its portfolio. A lower than normal tax charge is said to have resulted in increase in profit before tax of three percent and an increase in profit after tax of eight percent.
Costs of borrowing are reported to have remained consistent with previous periods. However, interest expense that makes this up includes foreign exchange losses on open inter group positions amounting to P50 million.
Overall, the group costs increased by eight percent and due to using more conservative impairment estimates, the charge for the period was P70 million. During the last six months, the group costs increased by eight percent and due to using more conservative impairments estimates the charge for the period stood at P70 million.
According Low, Letshego’s entry into micro-finance helped diversify product and revenue mix with minimal incremental risk. This has enabled Letshego to provide loans to business people who lack traditional indemnity.
He said geographic diversification will also be a driver of diversification. During the period under review, Letshego announced two investments, one in Nigeria and the other in Tanzania.
The two investments are expected to add over 100,000 customers and 33 customer access points. In Nigeria, Letshego acquired a 100 percent shareholding in a deposit taking financial institution that specialises in micro-finance in that country. In Tanzania, Letshego will acquire additional 20,000 customers once all regulatory procedures have been passed.
The group has agreed to become a 75 percent shareholder of a deposit taking financial institution that also specialises in micro finance. Low said after all procedures are completed, the move will place Letshego as one of the leading financial services organisations in Tanzania.
Still during the period under review, Letshego took a decision to divest from the South Sudan market and have since sold operations to some European-based developmental financial institution as a going concern.
As way of diversifying the portfolio, Low said the group will focus on three components being, being Micro-lending, Micro-finance and commercial banking. He said in countries where policies allow, they will make application for tier licensing to operate either two of the three.
In addition to diversification, Letshego Strategy encompasses three other aspects such as financial inclusion, delivering simple, appropriate and affordable solutions and the last one being providing access anywhere, anytime.
Letshego, which is a public listed company on the Botswana Stock Exchange (BSE), did not only realise growth in profits only. According to a quarterly report compiled by local brokerage firm Motswedi Securities, the group traded the highest volumes on the local counter – trading more than 83 million during the period and 35 percent of those were exchanged. The report shows that Letshego traded 1.4 million shares daily while other counters recorded less than 500,000 of daily shares traded, which reflects liquidity of Letshego compared to other stocks.