Letshego Financial Group on Friday presented its financial results for the year ended 31 December 20105 which shows an improvement from the past ones as profit before tax reached P1 billion while total revenues arrived at P2 billion. The financial results presentation was combined with the unveiling of Letshego’s refreshed brand look and a new tagline. The P1 billion profit before tax is said to be the biggest achievement in the company’s history. Letshego Group Managing Director, Chris Low said the results were driven by continued growth in operational performance across the business. The total of borrowing customers increased by 13 percent to 300,000 and more than P2 billion was disbursed in new loans. Even though the contribution of the Botswana subsidiary to the both profit and revenue shows a decrease, it remains the major contributor to the group’s earnings. Low said changes in revenues and profits are a direct result of the group’s strategy to reduce reliance on interest income.
Letshego’s results, according to the MD, show improvement in an environment of depreciating exchange rates against the Pula for most of the markets Letshego operates in. Excluding a foreign exchange loss for the year of P75.6 million, profit before tax is P1.1 billion - a 5 percent increase on the prior period. The foreign exchange loss incurred during the year is linked to the weakening of the South African Rand, Namibian Dollar and the Mozambique Metical against the local currency. Low has reiterated the group’s intentions to diversify its offerings. The group aims to diversify in terms of geographic, customer and product mix as well as through introducing new competences. During the period under review, Letshego expanded its business into Tanzania and Nigeria. In the existing markets, the group continues to realise growth, and in Botswana where the Letshego holds 25 percent market share, loans and advances to customers increased by 7 percent to P2.2 billion while in Kenya it increased by 110 percent to P400 million.
In 2015, Letshego introduced a number of new products, including agriculture supply chain financing and micro insurance. Low emphasized the group’s commitment and determination for financial inclusion. He said all they do will be aligned to their promise of improving lives. Letshego’s new tagline, which was unveiled on Friday, is “Let’s improve Life” and will remain the cornerstone of the group’s strategic agenda. In terms of operations, Letshego now has four businesses with deposit taking licenses with two from acquisitions in Nigeria and Tanzania and others in Mozambique and Rwanda. The group continues to evaluate opportunities for licensing in other countries. The benefits of deposit taking will, besides lowering the group’s overall cost funding, in the short to medium term, be enable the company to access the customers’ transactional accounts and offer them a broader set of financial service solutions.
Another key part of Letshego’s strategy is to diversify funding sources. In December 2015, the group says it refinanced R475m of maturing bonds and raised an additional R180 million. Letshego has also concluded other refinancing and introduced new, predominately Pula, funding lines which reduced the annual cost of borrowing to 10.5 percent from 11.3 percent in 2014. This has resulted in debt to equity levels increasing to 66 percent which is said to be in line with the strategic objective of optimising the group’s balance sheet.