Andrew Okai

Pan-African Inclusive Finance entity, Letshego Holdings Limited has announced positive Full Year Results for the year ended 31 December 2021.  The Group’s consolidated performance for 2021 has been strong with double digit growth in profits:  PBT (Profit Before Tax) was up 11% year-on-year to USD97.7m, and PAT (Profit After Tax) climbed 16% for the same comparative period, to USD62.1 million.

Asset quality remains strong with the Group’s Loan Loss Ratio (LLR) at -0.1% for the year, or 0.5% excluding 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.

Other financial performance highlights include:

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NET INTEREST INCOME up 6% to USD161m (FY 2020: USD158m)

TOTAL ASSETS increased by 30% year-on-year to USD1.3m (FY 2020: USD1.038m)

CUSTOMER DEPOSITS increased by 77% year-on-year to USD102m (FY 2020: USD56.5m)

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%).

CAPITAL ADEQUACY RATIO remains 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 USD31m and grew to constitute 16% of Operating Income (FY2020: USD24 million, 13% of Operating Income)   

Letshego’s double digit growth in profit was supported by the Group’s progress in its Transformation Strategy, underpinned by digitalisation.  Letshego’s 5year vision is on track to deliver world-class retail financial services, with a focus on platform customer experience, product eco-systems and multi-tier partnerships within its regional digital hubs. 

Andrew F. Okai, Group Chief Executive Officer, said, “Letshego’s 2021 performance was sound with our regional team delivering double digit growth in both Profit Before and after Tax, despite navigating our way through an ongoing global pandemic. We are making strong progress in transforming our organisation into an entity 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 strongest asset as we continue to acquire and empower individuals with specialist skills to power a future-fit organisation.”

2021 saw the commencement of Letshego’s second phase (the customer phase) of its 6-2-5 strategic execution roadmap, ‘Plan 2’. The second phase will run for two years and is characterised by focused investment into deepening investment and differentiating digital and tech enhancements. This is with a view towards 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. 

Within the Group’s lending value stream, Letshego achieved double digit growth in its Deduction at Source (DAS) portfolio of 14% (FY2021: USD89m). 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 USD73m (FY 2020: USD68,5m), while the Mass Mobile Loans portfolio enjoyed stronger performance, with growth more than doubling in value to USD48.3m (FY 2020: USD19,6m). 

Since launching the LetsGo Digital Mall, Letshego’s regional subsidiaries are focusing their local campaigns to register both existing and potential customers.  At the end of 2021, just over 93,000 Enterprise Active Customers (EAC) had registered on the Mall and loan applications submitted via digital channels increased to 78% by the end of the reporting period (End Dec 2020: 69%).  At the time of going to press, the Group has already tripled this figure to registering more than 300,000 Enterprise Active Customers as at 3 March 2022.

Letshego is on track to achieve 1 million EAC’s by end of 2022. Enterprise Value is also expected to gain momentum with the ongoing 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 in pandemic conditions remains its marginal portfolio of Micro and Small Entrepreneurs (MSE), comprising 8% of the Group’s total portfolio.

2021 was a milestone year for Letshego’s Savings and Deposit segment, crossing the P1 billion mark in portfolio value, and increasing 77% year-on-year to USD102m (FY2020: USD56.5m). Operational efficiencies over the period saw the segment reduce its costs by 100 basis points, with final quarter on quarter growth measuring the highest trajectory at 14% growth.

Employee costs increased by 11% year-on-year supporting the acquisition of specialist and digital skills needed to support digitalisation, risk management and the overall Transformation Strategy. Letshego remains passionate about upskilling and empowering employees, customers and members of the community with future-fit, digital skills that support sustainable financial inclusion and digital-savvy economies for Africa’s long-term benefit.

“In Uganda, performance trends were characterised by growth in Profitability, Loan book and Customer Numbers. Challenges were experienced as a result of Covid-19 pandemic (lockdowns and curfew), but these have been mitigated by maximizing digital platforms. Going forward, Letshego Uganda has exciting products and solutions up for launch, these include Digital Mall, USSD, Non-Government and considerable investment in five (5) distinct ‘Value Streams’ now leading Letshego’s Product delivery and customer focus namely; Lending, Savings & Deposits, Insurance, Payments and Lifestyle,” Giles Aijukwe, the CEO Letshego Uganda remarked.

Aijukwe added, “Our people-first initiative remains a priority as we upskill our employees to support our digital transformation and seize our potential for sustainable growth. Over 100% of our staff have been training in Agile Ways of Working, and over 100% are actively participating in globally accredited Coursera courses available on our digital learning platform.”

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