The pan African financial services group, Letshego says its capitalisation buffers remain well above regulatory requirements as funding continues to be a key focus. The Botswana Stock Exchange (BSE) listed financial outfit said capital management has mostly been centred around the optimal mix of debt and equity capital to support an expansionary business strategy and provide a higher return on equity to shareholders. The Group’s capital adequacy has been maintained at above 60 percent.
For the six months ended 30th June 2015, Letshego has almost hit the P6 billion mark in customer advances in its Botswana operations alone. This speaks to a 16 percent increase in advances compared to the corresponding period in the previous year. The quality of the advances book was within target levels with an impairment charge on the net portfolio at 2.5 percent. Similarly, interest income increased by 10 percent to P791 million while profit before tax increased by three percent to P522 million. Profit after tax also saw an increase of eight percent to P402 million. Moreover, earnings-per-share increased by six percent at 18.5 thebe. The annualised dividend yield is six percent and is consistent with the prior period’s dividend policy. Overall, returns and profitability have been robust. The Group remains well capitalised with a capital adequacy ratio of over 60 percent and cash resources of over P283 million.
Group Managing Director, Chris Low said the growth trajectory of Letshego continues to see tremendous progress, with a number of initiatives underway to facilitate this. He added that Letshego has decided to acquire a 100 percent shareholding in a micro-finance, deposit taking financial institution in Nigeria.
”The transaction is subject to relevant regulatory approvals. Once completed, the acquisition will provide Letshego a national deposit-taking and micro finance licence in Nigeria, Letshego’s fourth after Mozambique, Namibia and Rwanda,” said Louw.
In Tanzania, Letshego has moved to become a 75 percent shareholder of a deposit taking financial institution that specialises in micro finance by way of subscription for new shares, subject to final regulatory approval. Once all other conditions precedent have been completed, this will add a further deposit taking entity to the Letshego Group adding five customer access points and over 20,000 customers.
“This institution brings with it agency and mobile banking capability to push forward Letshego’s financial inclusion growth. This, when combined with Letshego’s existing business in Tanzania, will position Letshego to be one of the leading financial services organisations in Tanzania over time,” said Low.
He pointed out that the company continues to diversify in terms of geographic, customer and solution mix as well as through introducing new capabilities. This process was escalated during the period by way of good growth in all of Letshego’s markets, in particular Botswana and Kenya. A number of new products are being launched or enhancements being made to existing solutions. Low stated that Letshego will continue to seek deposit-taking licences to facilitate its financial inclusion agenda and ensure enhanced delivery of simple, appropriate and affordable financial services.
“We believe financial inclusion across Africa is fundamental to Africa’s success. We look forward to continuing to add value to the lives of all of our stakeholders, and indeed to continue to manage a strong, sustainable business model that appropriately rewards shareholders,” said Louw.