Letshego Holdings Limited Group expects its costs to increase moderately from the first half of 2021 propelled by the organizational re-design and digital implementation.
In line with its transformation strategy, Letshego Group chief executive officer (CEO) Andrew Okai stated in the strategy update the Group continues to invest in digital platforms and systems.
He added that as a result, Letshego’s performance will be driven primarily by improved payout volumes and credit portfolio performance, albeit moderated by recovering levels of non-funded income.
“We focused on strengthening the foundations of our business, by sharpening the deduction at source model and successfully expanding our digital channel access,” he said.
Okai stated that on 1st September 2020, the Group announced its transformation strategy, further contextualizing Letshego’s 6-2-5 execution roadmap. He said in June – Dec 2020, they focused on strengthening the foundations of the business, by sharpening the Deduction at Source (“DAS”) model and successfully expanding their digital channel access. He is if the view that adoption of alternate digital channels by customers is well ahead of expectations.
He confirmed that from January 2021, the Group transitions to ‘Plan 2’ (2022 – 2023), a period that will see the implementation of more differentiated digital and automated systems, a broader product offering and increasing enterprise agility.
“Our deduction at source loans business has remained resilient, while we have seen mobile loans emerging as a potentially strong revenue stream,” said Okai.
Okai further stated that despite ongoing headwinds related to the pandemic, Letshego Group has shown strong business resilience.
He added that asset quality remains strong through improved credit risk management and credit processes. He said this includes enhanced risk monitoring, frequent stress testing and the progressive digitisation of reporting and data tracking systems. He stated that Letshego’s ongoing portfolio stability has been supported by positive, fiscal measures implemented by regional governments throughout the pandemic.
“Letshego’s transformation strategy focuses on three customer segments, mass and middle-income Individuals, as well as Micro and Small Entrepreneurs (“MSE”). During the second half of the year, we have seen positive growth across all three segments,” he said.
He spoke of the second half of 2020, where Letshego strengthened its DAS offering through product enhancements and increased channel access, adding that this was in addition to improving the structure of mass mobile products.
He observed that 2020 has seen strong progress in digitising customer access channels to support business continuity and ensure the safety and wellbeing of their customers and people. He said Letshego is progressing well towards its long-term goal of achieving up to 80 percent digital adoption by 2025. He added that from 2 percent digital adoption in February 2020, increasing to 30 percent mid-year, Letshego expects to conclude the year with digital adoption in the median percentile range.
Okai is of the view that despite the production and gradual global roll out of vaccines, Letshego anticipates the current W-curve economic recovery trend to continue, given ongoing spikes in infection rates, as well as the recent discovery of COVID-19 variants.
“As a result of the Group’s digital transformation strategy, Letshego is confident in its ability to maintain business resilience and continuity, manage risks, and support the growth of new business channels and products,” said Okai.