Gets P250m funding from international investors
In order to deliver treasury benefits and mitigate funding risk for the group by achieving geographical diversification in its funding, Letshego has announced that it has secured P256 million of funding from specialist international investors.
The new funders are said to include development finance institutions, specialist investors who focus on micro and inclusive finance ventures and impact investors.
The diversification in funders is envisaged secure longer tenors as well as to reduce the group’s overall open foreign exchange exposure by drawing new local currency-denominated facilities.
The company’s diversification efforts are reportedly gaining momentum, especially in the informal sector where more than P350 million has been disbursed as informal loans in Ghana since the launch in late 2017.
This is part of Letshego’s efforts to become the continent’s leading inclusive finance group as it continues to increase the non-core portfolio.
Affordable housing solutions and education loans are now said to be the main drivers of growth in the Micro and Small Entrepreneurs (MSE) loan and together represent 6 percent of the total loan book.
The group, which has footprint in 11 countries in the continent, now allows its customers to access financial solutions through more than 800 access points which represents an increase of more than 50 percent from the previous period.
For the half year period, Letshego has reported a profit before tax increase of 19 percent to P589.9 million from P497.6 million registered in the same period last year. Letshego has announced that the new accounting model has had an impact on the impairments.
The IFRS 9 accounting standard which came into effect beginning of January this year has reportedly seen its impact being a 37 percent increase in impairment provisions from P402 million to P552 million and a P150 million decline in group’s retained earnings.
A higher effective tax rate of 37 percent resulted in a lower increase in Profit after Tax for the period of 11 percent. The group paid P219 million for the period in taxes.
Customer deposits growth is said to be in line with expectations led by Mozambique and Rwanda. Operating income increased by 15 percent and this is interpreted as a sign of progress in rolling out various strategic initiatives, including agency banking, mobile digital platforms, strategic partnerships and launching of new products, among others.