Meagre pickings for Letshego Namibia
The non-performing loans of Letshego Holdings Namibia rose from 3.6% in 2018 to 3.9% at the end of last year.
Jo-Maré Duddy
The recession bruised the bottom-line of Letshego Holdings (Namibia) last year with the locally-listed group's profit dropping by nearly 3.8%.
LHN yesterday reported a net profit of about N$451.1 million for the 12 months ended 31 December 2019, down nearly N$17.8 million from the previous financial year.
It is the first decrease in profit since LHN listed on the Local Index of the Namibian Stock Exchange (NSX) in 2017.
“The negative bottom-line is reflective of Namibia's ongoing challenge within the economic environment,” LHN chairperson Maryvonne Palanduz and CEO Ester Kali said in the latest set of unaudited provisional results released on the NSX on Monday. The results are unaudited “due to regulatory approval not being granted”, LHN said.
Both basic earnings per share (EPS) and headline earnings per share (HEPS) were down nearly 4.3% year-on-year. Both EPS and HEPS, the latter a measurement of a company's earnings based solely on operational and capital investment activities, were 90c compared to 94c in the 2018 book-year.
LHN said a dividend notice will be made when the audited results for the year under review are released.
Impairments
Interest income for lending activities rose about N$3.2 million or 0.5% year-on-year to nearly N$599.9 million during the 12 months under review.
A credit impairment charge of around N$9.2 million was reported compared to about N$18.2 million for the 2018 book-year.
Nearly N$105.7 million was written off in the past financial year, slightly up from the nearly N$104.3 million in 2018. Some N$102.4 million was recovered compared to N$99.1 million in the same year in 2018. An impairment adjustment of N$5.95 million was made, down from N$13.02 million.
Non-performing loans (NPLs) rose from 3.6% to 3.9% on an annual basis.
Operating expenses were up nearly 9.6% year-on-year to total about N$213.8 million.
Loan book
Assets totalled nearly N$3.4 billion at the end of December last year, 2% less than the end of 2018. Cash and cash equivalents fell from N$750.9 million to N$243.9 million.
LHN's advances to customers increased by nearly N$355 million or 14% to exceed N$2.9 billion.
Deposits by customers plummeted by about N$31.4 million or nearly 42% to N$43.4 million.
“During the year, following our strategic refocus on mass retail deposit mobilisation, we were selective in the institutional deposits accepted,” LHN said.
“This resulted in the value of the institutional deposits reducing from N$71 million to N$10 million. We grew our retail deposits from N$3 million in 2018 to N$33 million in 2019. This is expected to continue in 2020 as retail deposit mobilisation intensifies,” the group said.
LHN's consolidated group capital adequacy weakened from 95% to 91%. The group remains well capitalised, LHN said.
Prospects
LHN delivered a return of average assets of 13% during the year review. In 2018, the ratio was 15%.
Return on average equity came in at 16%, compared to 20% in 2018.
The group's cost-to-income ratio increased from 23% to 26%, while its debt-to-equity ratio decreased from 16% to 15%.
LHN said regulatory changes such as the recently promulgated Micro Lending Act, as well as the increasingly competitive landscape is expected to exert pressure on net interest margins going forward.
“While the economic conditions are expected to remain challenging over the medium term, Letshego Namibia will continue to pursue competitively priced funding lines, and continue to focus on cost discipline and capital optimisation strategies to enable the sustainable delivery of our inclusive finance agenda,” LHN said.
LHN closed at N$2.49 per share on Monday, down about 24% from the end of last year.
The recession bruised the bottom-line of Letshego Holdings (Namibia) last year with the locally-listed group's profit dropping by nearly 3.8%.
LHN yesterday reported a net profit of about N$451.1 million for the 12 months ended 31 December 2019, down nearly N$17.8 million from the previous financial year.
It is the first decrease in profit since LHN listed on the Local Index of the Namibian Stock Exchange (NSX) in 2017.
“The negative bottom-line is reflective of Namibia's ongoing challenge within the economic environment,” LHN chairperson Maryvonne Palanduz and CEO Ester Kali said in the latest set of unaudited provisional results released on the NSX on Monday. The results are unaudited “due to regulatory approval not being granted”, LHN said.
Both basic earnings per share (EPS) and headline earnings per share (HEPS) were down nearly 4.3% year-on-year. Both EPS and HEPS, the latter a measurement of a company's earnings based solely on operational and capital investment activities, were 90c compared to 94c in the 2018 book-year.
LHN said a dividend notice will be made when the audited results for the year under review are released.
Impairments
Interest income for lending activities rose about N$3.2 million or 0.5% year-on-year to nearly N$599.9 million during the 12 months under review.
A credit impairment charge of around N$9.2 million was reported compared to about N$18.2 million for the 2018 book-year.
Nearly N$105.7 million was written off in the past financial year, slightly up from the nearly N$104.3 million in 2018. Some N$102.4 million was recovered compared to N$99.1 million in the same year in 2018. An impairment adjustment of N$5.95 million was made, down from N$13.02 million.
Non-performing loans (NPLs) rose from 3.6% to 3.9% on an annual basis.
Operating expenses were up nearly 9.6% year-on-year to total about N$213.8 million.
Loan book
Assets totalled nearly N$3.4 billion at the end of December last year, 2% less than the end of 2018. Cash and cash equivalents fell from N$750.9 million to N$243.9 million.
LHN's advances to customers increased by nearly N$355 million or 14% to exceed N$2.9 billion.
Deposits by customers plummeted by about N$31.4 million or nearly 42% to N$43.4 million.
“During the year, following our strategic refocus on mass retail deposit mobilisation, we were selective in the institutional deposits accepted,” LHN said.
“This resulted in the value of the institutional deposits reducing from N$71 million to N$10 million. We grew our retail deposits from N$3 million in 2018 to N$33 million in 2019. This is expected to continue in 2020 as retail deposit mobilisation intensifies,” the group said.
LHN's consolidated group capital adequacy weakened from 95% to 91%. The group remains well capitalised, LHN said.
Prospects
LHN delivered a return of average assets of 13% during the year review. In 2018, the ratio was 15%.
Return on average equity came in at 16%, compared to 20% in 2018.
The group's cost-to-income ratio increased from 23% to 26%, while its debt-to-equity ratio decreased from 16% to 15%.
LHN said regulatory changes such as the recently promulgated Micro Lending Act, as well as the increasingly competitive landscape is expected to exert pressure on net interest margins going forward.
“While the economic conditions are expected to remain challenging over the medium term, Letshego Namibia will continue to pursue competitively priced funding lines, and continue to focus on cost discipline and capital optimisation strategies to enable the sustainable delivery of our inclusive finance agenda,” LHN said.
LHN closed at N$2.49 per share on Monday, down about 24% from the end of last year.
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