EXECUTIVE SUMMARY

The Letshego business returned to profitability in the period under review versus the loss posted at the end of December 2023. On a historical cost basis, excluding hyperinflationary accounting, profit after tax grew by 4% year on year to BWP74.2 million (H1 2023: BWP71 million). With hyperinflation, profit after tax closed at BWP17.8 million in June 2024 (H1 2023: BWP71 million). This was a return to profitability from the year-end loss of P149 million.

The Group’s profit before tax was 31% behind year on year at BWP186.3 million in June 2024 (H1 2023: BWP269.2 million). However, business fundamentals remain resilient with the Group sustaining strong top line performance for the period, demonstrated by double-digit operating income growth of 22% year on year.

Income growth was supported by mobile lending, up 73% in book size to BWP909 million in line with the Group’s product diversification strategy. Ghana continues to lead in mobile lending, with strong growth recorded in Tanzania and Botswana. The Group’s mainstay Deduction at Source offering recorded steady loan growth of 6% year on year to BWP11.9 billion.

Income from insurance arrangements increased 8% year on year. Net interest income was strong, recording a 20% upswing in growth for the period under review, despite an 18% increase in interest expense compared to the same period last year.

As initiated in 2023, the Group took a more prudent approach to expected credit losses by provisioning Stage 3 loans, based on Time in Default. This, coupled with a strict write off policy led to a net impairment increase of 51% overall, and a loan loss ratio of 4.8%.

Aggressive write offs and impairments have seen an improvement in the Group’s coverage ratio from 58% to 63% year on year. A robust portfolio remediation strategy to accelerate collections and recoveries momentum has been put into place.

As determined in 2023, Ghana remains a hyperinflationary economy for reporting purposes. As a result, the Group recognised a net monetary loss of BWP50 million for the first half, due to the subsidiary being in a net monetary asset position for the period, and the Ghanaian Cedi losing purchasing power.

With sound fundamentals in place, Letshego Africa expects to navigate macro economic headwinds while focusing on strong customer growth product prospects.

FINANCIAL HIGHLIGHTS

• Interest income up 19% yoy to BWP1.87 billion (2023: BWP1.57 billion)
• Insurance revenue up 8% yoy to BWP158 million (2023: BWP146 million)
• Operating income up 22% yoy to BWP1.34 billion (2023: BWP1.1 billion)
• Interest expense up 18% yoy to BWP793 million (2023: BWP674 million)
• Profit before tax down 31% yoy to BWP186 million (2023 Restated: BWP269 million)
• Total assets up 7% yoy to BWP18.2 billion (2023 Restated: BWP17 billion)
• Net customer advances up 6% yoy to BWP13.4 billion (2023 Restated: BWP12.6 billion)
• Non funded income up 32% yoy to BWP280 million (2023: BWP212 million)

Sustainable Stakeholder Value

During the period, the Group bought back 17,245,784 Letshego shares at 115t. The Group will continue to assess its ability to carry out further buybacks, which will be dependent on inflow from subsidiaries. Share buybacks can improve the overall Return on Equity, as a form of shareholder value creation. Shareholders approved a new share buyback mandate at the Annual General Meeting held on 26 July 2024; the option will remain available until the Group’s AGM in 2025.

Outlook

The macro-economic outlook for our presence countries remains fluid, with the baseline outlook for regional economic prospects for 2024-2025 remaining positive. Regional GDP is projected to increase to 3.8% and 4.1% for 2024 and 2025, respectively. Rising geopolitical tensions in the Middle East, potential escalation in Russia/Ukraine and China/Taiwan conflicts, potential policy shifts following globally significant elections and domestic challenges, all potentially pose downside risks to the economic prospects.

Africa remains vulnerable to climate related shocks, while a number of countries carry increasing risk of debt distress. Continuing geo-economic fragmentation and risk of escalation of geopolitical tensions and regional conflicts also pose severe headwinds to the region. Five of our eleven presence countries will hold their national elections this year, however, social political risks from these elections are assessed as low. Policy continuity is rated high.

While we still expect strong loan and income growth, driven by DAS and mobile loans, we acknowledge that we are not immune to the external operating environment. We still expect to see downside impact from expected credit losses for the remainder of this year, although tempered by effective collection efforts and cost optimisation. To this end, the Group will not be declaring an interim dividend, but will instead preserve its capital base to safeguard future performance.

From a strategic perspective, Letshego’s Transformation Strategy, launched in September 2020 and guided by our 6-2-5 execution roadmap, draws to a conclusion in 2025. Letshego Africa has progressed strategic planning that will steer the Group into the next chapter of sustainable growth. Stakeholders will be updated once final planning and governance is complete. Letshego remains committed to maintaining a strategy and structure that deepens our impact, enables agility in ever-changing markets, and most importantly, unlocks a tangible and measurable return for our customers and all valued stakeholders.

Letshego’s flagship DAS offering remains the Group’s foundation from which other product solutions continue to grow and evolve. Mobile or Instant Loans is one of the Group’s more recent growth streams that stand to bring future growth value given access and benefits in providing micro capital to more underserved members of the community. Letshego Africa looks forward to articulating our revised focus beyond 2025 at our next presentation.

We wish to thank our strategic partners and stakeholders across our footprint who help extend our reach, increase economic value and deepen impact via our inclusive finance strategy.

This year Letshego celebrates 26 years of improving lives across Africa. We are excited to maintain our momentum as we build a future-fit organisation that delivers sustainable value for customers, employees, investors, strategic partners as well as our regional communities.

For and on behalf of the Board of Directors:

Philip Odera
Group Chairman

Aobakwe Aupa Monyatsi
Group Chief Executive

29 August 2024

Related Downloads

Letshego Africa Holdings Group Interim Results June 2024 – Fact Sheet.pdf

Letshego Africa Holdings HY2024 Unaudited Interim Condensed Consolidated Financial Statements.pdf