The Board of Directors of Letshego Holdings Limited (“the Group”/“Letshego Africa”) herewith presents an extract of the reviewed consolidated full year financial results for the period ended 31 December 2021.
OVERVIEW
Letshego achieved double digit performance growth for 2021, with profit before tax up 11% year-on-year to P1.147 billion, and Profit after tax climbing 16% for the same comparative period, to P730 million. Asset quality remains strong with the Group’s Loan Loss Ratio (LLR) at -0.1% for the year, or 0.5% if we strip out once off deductions. The Group’s Non-performing loans ratio increased marginally to 5.9% for the year (FY2020: 5.3%), reiterating stability in the Group’s credit and risk management framework.
Performance for the year was largely driven by 17% growth in net customer advances, totalling P11.9 billion.
2021 saw the commencement of Letshego’s second phase of its 6-2-5 strategic execution roadmap, entitled ‘Plan 2’. The duration of this second phase, the customer phase is two years, and is characterised by focused investment into deepening the Group’s investment into differentiating digital and tech enhancements, spurring momentum in end-to-end automation of processes, systems and platforms, while securing strategic milestone in platforms and products that enable a step change in tangible value for new and potential customers. In the first half of the year, Letshego went live with its LetsGo Digital Mall in 10 markets, following successful pilots in Botswana and Nigeria. The LetsGo Digital Mall is a unifying platform, increasing customer access across multiple channels including web, USSD, whatsapp and mobile. The Digital Mall’s technical structure is built in such a way as to enable Letshego to build and evolve this platform towards its ambition of creating an inclusive one-stop portal not only for Letshego products, Saving, payments, loans and lifestyle solutions, but also enabling access to everyday facilities such as mobile data and airtime, municipal service payments, all in a secured environment.
Net Interest Income saw a gradual increase of 6% year-on-year, and Non-funded income increased by 30% year-on-year, buoyed by momentum in new insurance offerings in select markets. In line with the Group’s commitment to spurring focused investment, the Group’s operating expenses grew 13% year-on-year. Investment is expected to increase further in the final phase of Plan 2 for the 2022 financial year.
Within the Group’s lending value stream, Letshego achieved double digit growth in its Deduction at Source portfolio of 14% (FY2021: P10.5 billion). Profitability in Deduction at Source remains positive, buoyed by digital and system enhancements. The year saw slower growth in the Micro & Small Entrepreneur portfolio increasing in value by 7% to P859 million (FY 2020: P806 million). The Mass Mobile Loans portfolio enjoyed stronger performance, with growth more than doubling in value to P568 million (FY 2020: P231 million).
Letshego remains well capitalised at 35% capital adequacy ratio, and has a strong liquidity position to support future business growth. The Group is pleased to announce a final dividend of 9.7 thebe.
FINANCIAL HIGHLIGHTS DECEMBER 2021
- PROFIT BEFORE TAX (PBT) up 11% year-on-year to P1.147 billion (FY 2020: P1.030 billion)
- PROFIT AFTER TAX (PAT) up 16% year-on-year to P730 million (FY 2020: P631 million)
- NET INTEREST INCOME up 6% to P1.979 billion (FY 2020: P1.861 billion)
- NET ADVANCES up 17% to P11.9 billion (FY 2020: P10.2 billion), while Gross Advances grew by 16% year-on-year
- TOTAL ASSETS increased by 30% year-on-year to P15.8 billion (FY 2020: P12.2 billion)
- LOAN LOSS RATIO (LLR) of -0.1% (FY 2020: 0.3%) showed continuing loan book quality, and a write back in East Africa
- CUSTOMER DEPOSITS increased by 77% year-on-year to P1.2 billion (FY 2020: P664 million)
- COST TO INCOME RATIO of 52% (FY 2020: 50%), in line with expectation due to heightened digital investment and insurance costs in Namibia
- EFFECTIVE TAX RATE (ETR) improved to 36% (FY 2020: 39%)
- EARNINGS PER SHARE improved by 16% at 31.5 thebe (FY 2020: 27.1 thebe)
- RETURN ON EQUITY (ROE) increased to 14% (FY 2021: 13%) and return on assets was maintained at 5% (FY 2020: 5%)
- NON-PERFORMING LOANS ratio increased to 5.9% (FY 2020: 5.3%)
- CAPITAL ADEQUACY RATIO remain well capitalised at 35% (FY 2020: 39%) alongside strong asset growth
- DEBT TO EQUITY increased to 145% in line with gearing ratio guidelines (FY 2020: 118%)
- NON-FUNDED INCOME increased by 30% year-on-year to P368 million and grew to constitute 16% of Operating Income (FY2020: P284 million, 13% of Operating Income)
