Letshego vows to bounce back

By Hilary Mare

HAVING endured depressed financial results for the six months ending June 30 2020, Letshego Holdings Namibia Limited has said that it will focus on accelerating its digitisation agenda in order to harness operational efficiencies as well as extend its reach to its customer base while enhancing the customer experience.

For the same period, unaudited interim financial statements show that profit went down by at least 37 percent and net interest income down by three percent when compared to the same period last year.

“As the Covid-19 pandemic continues to unravel, economic conditions are anticipated to remain depressed over the medium term. In the existing low interest rate environment, margins are expected to be under pressure. To ensure sustainability during these turbulent times, Letshego is focusing on strengthening its competencies in the existing core business, improving organisational agility, cost discipline and refreshing its organisational design and approach to innovation,” the financial institution said adding that deposit mobilisation initiatives will continue as Letshego grows its deposit base.

Letshego, now listed on the Namibian Stock Exchange went on to say that while the group remains committed to delivering shareholder returns, the existing business environment calls for a more prudent approach in the preservation of capital.

“As such, Letshego’s approach to the road ahead will be underpinned by ensuring that the group’s capital is adequate to absorb potential shocks from the operating environment.”

In its financial results total revenue decreased by 23 percent and advances to customers grew by 18 percent. Cost to income ratio increased to 33 percent from 24 percent in 2019, as a result of the decline in total revenue.

Impairment charge for the period was N$11.4 million, translating to a loan loss ratio (against average gross advances) of 0.4 percent. Furthermore, return on average equity was 11 percent and return on average assets was nine percent. Earnings and headline earnings per share of 30 cents were achieved, a decrease of 36 percent.

“As per existing dividend practice, no interim dividend is being declared,” the institution said.

On a positive note, Letshego noted that transactional LetsGo accounts increased by 59 percent from 12 590 as at December 31 2019 to 19 973 as of June 30. This mirrors the growth in retail deposits from N$43 million to N$65 million during the same period.

Contributions to Covid-19 assistance amounted to N$700 000 to the Government Relief Fund, N$100 000 earmarked for staff assistance and N$300 000 promised for further relief during the 2020 financial year.

“These declines were mainly driven by yield compression as overall interest rates on advances declined. At the same time, revenues from cell captive arrangements declined due to higher loan write-offs as well as reduced insurance default cover premiums. Although growth in operational expenses was minimal at three percent, this was outweighed by the significant drop in revenue,” a statement on the financial results released last week reads in part.