Sunday, November 29, 2020

Letshego shifts ‘interest’ to non-interest income

Leading micro lender, Letshego Holdings Limited has admitted that the non-interest income meadow remains an area of focus following recent changes in the interest stream.

The company says 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. The central bank’s Monetary Policy Committee (MPC) recently reduced the bank rate by one percentage point to 6.5 percent. Economic commentators continue to praise the decision to slash the bank rate in a bid to jerk up the jaded economy.

However reduced rates are reportedly negatively impacting a number of commercial banks operating in the country as most of them continue to record declines in their interest streams. Letshego says it hopes to capitalise on consumers that are left out by the banks. At the same time, the company’s aspirations to grow into the banking space were squashed 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.

The company 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. Meanwhile Letshego’s latest financials, released on Friday, show a 20 percent rise in its basic Earnings Per Share (EPS) for the financial year ended December 2014. The group’s financials released 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.

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Sunday Standard November 29 – 5 December

Digital copy of Sunday Standard issue of November 29 - 5 December, 2020.