Letshego Holdings Limited, the pan African provider of unsecured consumer loans, has held back its geographic expansion plans into Zimbabwe, as the prevailing economic outlook is indistinct. The group had set its geographic expansion target on Zimbabwe, Ghana and Nigeria.
Outgoing Managing director Jan Claasen said the group has not familiarised fully with Zimbabwean President’s nationalisation drive. Under Zimbabwe’s empowerment laws, black Zimbabweans should acquire 51 percent of foreign businesses.
Claasen said from their evaluation most banks in Zimbabwe are in a loss position rendering the economic position further uncertain. “As a group we don’t believe it’s the right time to expand into Zimbabwe but we are not ruling out our intentions of establishing our subsidiary there in the near future,” said Claasen.
In Ghana as well the group encountered difficulties as the asset value price was too high. However Claasen was upbeat on the Nigerian market saying, “Nigeria is quite a big market and we continuously look for opportunities there”.
The group is looking into rolling out its banking services strategy beginning of November with focus on the key market, South Africa as well as in East Africa with particular focus on Uganda and Tanzania.
In a declining interest rate environment where the Letshego Group operates, coupled with a large equity base and fixed cost of funding, the group declared an 8 percent profit before tax for the interim financial period ended 31 July 2013.
The profits stood at a comfortable P459.6 million higher than the previous financial period, mainly driven by the increase in assets. Letshego Holdings operates in 11 African countries. A change in the trend was observed as for the first time 55 percent of the profits before tax were generated outside Botswana.
The group praised its three largest markets in Botswana, Namibia and Mozambique for a 22percent bulge in its loan book. The quality of the loans and advances to customers has remained consistent with previous financial periods.
The Zambian market was excluded for the period under review because of the too many hiccups.
Nonetheless the group is at an advanced stage to dispose of its entire shareholding in Letshego Zambia. The disposal if concluded is not expected to have any significant impact on the group’s result considering its insignificant contribution.
Claasen however said the exciting results might be affected drastically in the next financial year because of the presidential elections that will be held next year in different countries they operate.
Given the prevailing economic conditions, the board anticipates continued growth in the advances book during the financial year to 31 January 2014.Letshego Holding Limited has appointed Chris Low as group managing director effective November.
Low takes over from Claasen who is retiring after leading the company for ten years.The company declared a dividend of 4 thebe per share.