The pan-African inclusive finance entity, Letshego Holdings Limited, last week announced positive annual results for the financial year ended December 31, 2021.
The Group’s consolidated performance for 2021 indicates double-digit profit growth: PBT (Profit Before Tax) increased by 11% year-on-year to 97.7m USD, and PAT (Profit After Tax) ) increased to 16% for the same comparative period. , at $62.1 million.
Asset quality remains solid with the Group’s Loan Loss Ratio (LLR) at -0.1% for the year, or 0.5% excluding one-off deductions.
The Group’s non-performing loan ratio increased slightly to 5.9% for the year (FY2020: 5.3%), confirming the stability of the Group’s credit and risk management framework. The performance for the year is largely explained by a 17% growth in net customer advances.
Other financial performance highlights include:
· NET INTEREST INCOME up 6% to $161m (FY20: $158m)
· TOTAL ASSETS increased 30% year-over-year to $1.3m (FY2020: $1,038m)
· CUSTOMER DEPOSITS increased 77% YoY to $102m (FY2020: $56.5m)
· COST/INCOME RATIO by 52% (FY2020: 50%), in line with expectations due to increased digital investments and insurance costs in Namibia
· EFFECTIVE TAX RATE (ETR) improved to 36% (FY2020: 39%)
|· EARNINGS PER SHARE improved by 16% to 31.5 thebe (financial year 2020: 27.1 thebe)
· RETURN ON EQUITY (ROE) increased to 14% (FY2021: 13%) and return on assets was maintained at 5% (FY2020: 5%).
· CAPITAL ADEQUACY RATIO remains well capitalized at 35% (FY2020: 39%) alongside strong asset growth
· DEBT TO EQUITY increased to 145% in line with leverage ratio guidelines (FY2020: 118%)
· UNFUNDED REVENUES grew 30% year-over-year to $31m and reached 16% of operating income (FY2020: $24m, 13% of operating income)
Letshego’s double-digit profit growth was supported by the Group’s progress in its Transformation Strategy, supported by digitalisation. Letshego’s 5-year vision is on track to deliver world-class retail financial services, with a focus on platform customer experience, product ecosystems and multi-level partnerships within its regional digital hubs.
Andrew F. Okai, Group Chief Executive, said: “Letshego’s performance in 2021 has been strong, with our regional team delivering double-digit pre- and post-tax profit growth, despite going through a global pandemic in Classes. We are making great strides in transforming our organization into one that leverages digital and end-to-end automation to unlock significant enterprise value, not only for our customers, but also for our investors and shareholders. People remain our most important asset as we continue to acquire and empower individuals with specialist skills to propel a forward-looking organization.
2021 saw the start of Letshego’s second phase (the client phase) of its 6-2-5 strategic execution roadmap, “Plan 2”. The second phase will last two years and is characterized by targeted investments on deepening investments and differentiating digital and technological improvements.
“This aims to drive momentum in the end-to-end automation of processes, systems and platforms, while securing a strategic step into platforms and products that enable a step change of tangible value for new and potential customers,” Okai said.
Within the Group’s loan value stream, Letshego achieved double-digit growth in its withholding tax (DAS) portfolio of 14% (FY2021: $89m). The profitability of Withholding Tax remains positive, driven by digital and system improvements. The year saw slower growth in the Micro & Small Entrepreneur portfolio which increased in value by 7% to $73 million (FY2020: $68.5 million), while the Mass Mobile Loans portfolio recorded a stronger performance. strong, with growth that more than doubled in value to $48.3 million. (FY2020: $19.6 million).
Since the launch of the LetsGo Digital Mall, Letshego’s regional subsidiaries have been focusing their local campaigns to register existing and potential customers. By the end of 2021, just over 93,000 active enterprise customers (EACs) had registered on the Mall and loan applications submitted through digital channels had increased to 78% by the end of the reporting period (end December 2020: 69%). At press time, the Group has already tripled this figure to register more than 300,000 Enterprise Active Customers as of March 3, 2022.
Letshego is on track to reach 1 million EACs by the end of 2022. Enterprise value is also expected to grow with the continued addition of new products to the mall, as well as the launch of flagship programmatic social impact solutions (including Affordable Housing, Agriculture, Education and Health).
Letshego’s most vulnerable product segment under pandemic conditions remains its marginal portfolio of micro and small entrepreneurs (MSEs), which represents 8% of the Group’s total portfolio.
2021 was a pivotal year for Letshego’s savings and deposits segment, crossing the 1 billion peso mark in portfolio value and growing 77% year-over-year to reach $102 million ( fiscal year 2020: $56.5 million). Operational efficiencies during the period enabled the segment to reduce costs by 100 basis points, with last quarter-on-quarter growth measuring the highest trajectory at 14% growth.
Personnel costs increased by 11% year-on-year, enabling the acquisition of specialist and digital skills needed to support digitization, risk management and the overall transformation strategy. Letshego remains passionate about upskilling and empowering employees, customers, and community members with future-fit digital skills that support sustainable financial inclusion and digital-edge economies for the long-term benefit of Africa.
“In Uganda, performance trends were characterized by growth in profitability, loan portfolio and number of clients. Challenges were encountered as a result of the Covid-19 pandemic (lockdowns and curfews), but these were mitigated by maximizing digital platforms. Going forward, Letshego Uganda has exciting products and solutions to launch including Digital Mall, USSD, Non-Government and significant investment in five (5) distinct ‘value streams’ which now drive product delivery and Letshego’s customer orientation, namely; Loans, savings and deposits, insurance, payments and lifestyle,” noted Giles Aijukwe, CEO of Letshego Uganda.
Aijukwe added, “Our people-centric initiative remains a priority as we develop our people to support our digital transformation and seize our potential for sustainable growth. Over 100% of our staff have completed training in agile working methods and over 100% actively participate in globally accredited Coursera courses available on our digital learning platform. »