Following two recent major announcements, local micro lender Letshego Holdings Limited has recorded a huge growth in share price to reach a new high in five years. Friday capital markets figures shows that the BSE quoted micro lender became the largest gainer as it pocketed a huge 16.7 percent to reach a new high of 307 thebe since its share split in 2010.
Financial analysts at Motswedi Securities attribute the upward trend of the share price to recent announcement of Letshego’s plans to do a share buy-back of up to 10 percent of its stated capital. At the same time, the BSE quoted micro lender this past week announced the possibility of acquiring a deposit taking firm in Tanzania. According to the statement, Letshego has entered into negotiations with a third party in Tanzania to become a 75 percent shareholder in a deposit taking financial institution that specializes in micro finance, which if successfully concluded may result in a transaction that could have an impact on its share price.
The company’s aspirations to grow into the banking space in Botswana were quashed following refusal by Bank of Botswana to award it a banking license. However, the pan African financial entity said last year it has put its disappointment behind and intends to focus its energies on the business it knows better. The group will be looking to diversify its product offering into funding small businesses and tapping into the unbanked market.
Letshego says it hopes to capitalize on consumers that are left out by the banks. At the same time, the micro lender said it has discovered a large adjacent customer base that is marginal for commercial banks and embraces financial inclusion. It intends to further expand its target market to include individuals employed by corporates but not captured in the traditional bank target markets.
The company’s latest financials, released in March this year, show a 20 percent rise in its basic Earnings Per Share (EPS) for the financial year ended December 2014. The group’s financials also showed that it’s EPS for the period were 33.20 Thebe translating to an upward trend of 20 percent on the previous year on an annualised earning basis. At the same time, Letshego’s Return on Equity (ROE) also grew at a rate of 21 percent compared to the prior year.
The Botswana Stock Exchange (BSE) quoted consumer lender also recorded an upward trend in its advances to customers which went up by 28 percent to P5.7 billion. The leading micro lender admitted that its non-interest income meadow remains an area of focus following recent changes in the interest stream. Its financial statements shows that it has recorded a 35 percent rise in the non-interest sector during the financial year ended December 2014, adding that the area remains of ‘focus’ as interest rates are under pressure.