Shareholders of Letshego Holdings are in support of the group’s transformational strategy and digital adoption agenda. This is reflected by the increase in appetite for the company’s shares on the Botswana Stock Exchange (BSE). Staff Writer KITSO DICKSON reports
The uptake boosted stock value, evidenced by its rally since last year. Letshego’s share price increased by more than 84 percent (28 July 2020 (58 thebe) – 1 September 2021 (1.07 thebe).
On a year-to-date basis, Letshego remains in the top three traded stocks on the BSEL, gaining 48.3 percent value during this period. The group’s CEO Andrew Okai explained that as they speak to shareholders (existing and new ones), they showed that the increase in appetite spoke to two things: its performance and the confidence in the company strategy.
“What the feedback has generally been is that they support the digitalisation agenda,” he noted, adding that they believe the 6-2-5 strategy has the potential to deliver value.
Letshego announced its Transformation Strategy last year. The strategy entailed a positive shift towards digitalisation, embedding an agile culture, and enhancing enterprise risk frameworks. “Plan 2” is a two-year phase plan characterised by increased investment in digital-first initiatives along with the end-to-end automation of processes and platforms.
In the first six months of 2021, Letshego has already achieved targeted digital milestones, including the rollout of its LetsGo Digital Platform across 10 markets, giving customers direct access to lending solutions via their mobile phones.
Although the strides that the group has made on this journey have been inspiring, the group still has a long way to go. Letshego is still on the march and is on track to achieve its 2025 targets, which are delivering a marked change in sustainable growth and impact and value for both customers and shareholders.
The second aspect, which Okai says excited shareholders, is building and working on the strategy. They have not dropped the ball on the performance of the company. “This is also something that they have shown appreciation for,” he said. Taking the last 18 months into account, Okai said the return on Letshego’s has been significantly ahead of benchmark.
Despite the challenging economic environment, Letshego achieved a double digit growth for the first half of 2021, with profit before tax up 23 percent year-on-year to P544 million. Profit after tax rose 28 percent for the same comparative period.
Asset quality remained robust with the group’s Loan Loss Ratio (LLR) within target range at 1.4 percent, and the non-performing loans ratio reducing to 5.6 percent (H1 2020: 7.9 percent). Strong performance for the interim period was driven by a 20 percent growth in net customer advances, totalling P11.1 billion.
Product performance saw double digit portfolio growth in Letshego’s primary deduction-at-source (DAS) portfolio of 16 percent. DAS customer numbers increased by 19 percent to 694 000 (H1 2020: 586 000).
The Micro and Small Entrepreneur (MSE) segment remained more sensitive to economic slowdowns with net loan book values dropping 3 percent. However, MSE profitability improved with recovery and collection efficiencies. Letshego’s Mass Mobile portfolio performed well with a portfolio value increase over 200 percent year-on-year.
Net Interest Income increased by 9 percent to P1.019 billion (H1 2020: P910million), buoyed by strong net payout growth. Borrowing costs decreased by 7 percent year-on-year (excluding non-risk interest component on mobile loans), following concerted efforts by the group to diversify its funding base and grow its customer deposit base. Operating income was up 14 percent, despite the new Delta variant of COVID-19.
Non-funded income increased 33 percent year-on-year, largely boosted by Namibia’s revised insurance arrangement, increasing overall insurance revenue by 116 percent to P90 million (HY 2020:P42 million). Further diversification in Letshego’s insurance offering will see Kenya, Mozambique and Botswana expand their offerings into life and short-term insurance, leveraging the group’s increasing efficiencies achieved via digitised channels and platforms.
