- Good support also came in from the JSE, BSE
- Deposits rise supported by Namibia, Mozambique
According to CFO Gwen Muteiwa, the key drivers of the growth in deposits has been small institutional investors in Mozambique and Namibia who usually have deposits averaging P950,000.
Muteiwa also revealed that the group has also seen middle-income retail customers coming in with a smaller deposit base of about P3 000 mainly through from Mozambique, which accounts for about 46 percent. “Ghana and Namibia are also very strong in terms of the ability to raise deposits,” she said. Customer deposits have grown by about 77 percent during the reporting period.
“What we have managed to do is we have managed to improve our deposit mix and managed to source longer-term funding and also reduced secured funding while increasing local funding,” Muteiwa said, noting that the group’s cash position remained strong at year-end. Borrowings were up 31 percent, with a good pipeline of borrowers, which the CFO said is a good mix of different funders.
The group has seen good support coming through from the banks and DFIs. Muteiwa also said good support came from the Botswana Stock Exchange (BSE) for the amounts that “we raise on the note programme”. She noted: “We are at the end of the Johannesburg Stock Exchange bond that we have but we continue to raise money on the BSE.”
What is important to note is that Letshego used to raise money on the JSE mainly for Namibia. But with Namibia having issued its own bond, the CFO expects the trend to dwindle. In the reporting period, average cost of funds has come down by about 40 to 50 basis points year-on-year. “As I indicated, we have a good mix in terms of local and foreign debt,” Muteiwa said.
She added that debt to equity ratio stands at 145 percent. This is up from 118 percent last year within the group’s appetite. The capitalisation ratio is at 35 percent. “This is really still strong on the back of increased assets being our denominator,” she said. “What we have done with the capital optimisation plan is that we are moving towards ensuring organic growth in subsidiaries that needed capital and extracting from those with excess capital and also other initiatives to increase value for our shareholders.”
Accordingly, Rwanda and Tanzania banks have been capitalised, she said, adding that in Ghana “we have a requirement to convert sub debt to Tier 1 equity. We are working with the central bank on that”. She noted: “Nigeria and Kenya are also coming up for capital within the second half of the first half of this year; Nigeria mainly due to regulatory requirements. Uganda is coming up for growth purposes as they pursue a microfinance licence.”
