Letshego Holdings Limited has recorded a profit before tax of P1 billion which was supported by underlying growth in customers and stable interest margins and cost of funding. The financial results were presented by the group Managing Director, Chris Low and Chief Financial Officer (CFO), Colm Patterson on Monday in Gaborone. Low said the Botswana subsidiary was a major contributor to the group where Letshego relies mainly on government employees through deduction at source. He said Botswana also led the group in relation to non-government diversification in a country where most of the work force is employed by government.Letshego registered a growth of three (3) percent in Botswana, 16 percent in Namibia and 38 percent in Mozambique. These three markets are considered largest within Letshego portfolio. Swaziland, on the other hand, saw an increase of 64 percent in loan portfolio and joined Botswana as countries that have made significant progress in growing and diversifying the non-government deduction at source businesses. Letshego, which is a leading player Pan African micro lending business, currently has presence in 11 African countries, mostly in Southern and Eastern Africa but has recently made inroads in the Western part of the continent by entering Nigeria and Ghana. Ghana is the latest market added to the group, which has about P4 billion market capitalisation, which happened through the acquisition of 100 percent shareholding in Afb Ghana in January 2017. The Ghana subsidiary is already said to be generating strong revenues in its first year of joining the group with diversification of the loans only business by introducing a mobile wallet which offers savings solutions.
In Nigeria, Letshego has piloted a deduction at source lending which was done in 2017 and has been deemed successful. The group will start rolling out the business, firstly focusing on employers in Lagos state before going to other states. The company grew its profit after tax by 11 percent to P745.5 million in 2017 from P669.7 million the year before. The group’s customer numbers have also increased, and now stands at 413, 000 from 300, 000 while customer savings numbers increased form 106, 000 to 154, 000. Deposits and savings due to customers stand at P228 million and the group says the conversion of credit customers to savings customers is encouraging. In 2017, Letshego which is listed on the Botswana Stock Exchange (BSE) as well as Namibian Stock Exchange (NSX) grew its loans by 17 percent with the quality of the loan book remaining at targeted levels with the exception of Rwanda and Tanzania where the group has taken additional provisions on specific segments of the loan portfolios. For the period under review, Letshego’s loan loss ratio was 3.1 percent as compared to the targeted levels of 3 percent.
The rate loss could have been at 2.4 percent if the referenced Rwanda and Tanzania operations were removed from the equation. With the increasing advances to customers – which grew by 17 percent last year – Letshego believes it has a strong funding pipeline in place to support the business growth going forward. Letshego, which was founded in Botswana 20 years ago, engaged in a share buy-back in 2017, a move enabled by the group’s cash flows and funding pipeline which resulted in 24.4 million shares or 1 percent being repurchased at an average price of P1.97 per share.
The group is looking to request shareholders at the upcoming Annual General Meeting (AGM) to extend the buy-back mandate. On Monday, Patterson said the share buy-back mandate will continue to be important to Letshego for it to generate returns for shareholder over and above the existing dividend policy. Low announced that Letshego has introduced an intermediate holding company structure in Mauritius and over time, subsidiary companies are expected to be moved to that ownership structure. However, this according Low, will not result in any way change in the ownership of the subsidiaries but will allow for a more tax efficient movement of dividends within the group.