TIDMASAI
RNS Number : 3806M
ASA International Group PLC
21 September 2021
ASA International Group plc reports H1 2021 results
Amsterdam, The Netherlands, 21 September 2021 - ASA
International Group plc, ('ASA International', the 'Company' or the
'Group'), one of the world's largest international microfinance
institutions, today announces its half-year results for the
six-month period from 1 January to 30 June 2021.
Key performance indicators
(UNAUDITED) YoY YTD YTD % Change
(Amounts in USD (constant
millions) H1 2021 FY2020 H1 2020 FY 2019 % Change % Change currency)
Number of clients
(m) 2.5 2.4 2.3 2.5 7% 5%
Number of branches 2,036 1,965 1,956 1,895 4% 4%
Profit before tax 7.5 2.6 -2.5 54.3 400% 192% 167%
Net profit(1) 1.4 -1.4 -1.5 34.5 197% 203% 170%
OLP(2) 415.0 415.3 388.6 467.4 7% -0.1% 2%
Gross OLP 456.9 445.3 411.7 471.4 11% 3% 5%
PAR > 30 days(3) 12.3% 13.1% 3.0% 1.5%
(1) Net profit was substantially reduced by the provision of
deferred taxes for future dividend payments by some of the Company's
operating subsidiaries and the non-deductibility of part of the
Group expenses.
(1) Outstanding loan portfolio ('OLP') includes off-book Business
Correspondence ('BC') loans and Direct Assignment loans, excludes
interest receivable, unamortized loan processing fees, and deducts
modification losses and ECL provisions from Gross OLP.
(2) PAR>30 is the percentage of on-book OLP that has one or
more instalment of repayment of principal past due for more than
30 days and less than 365 days, divided by the Gross OLP.
H1 2021 Highlights
-- The Company's operational and financial performance
substantially improved with pre-tax profit increasing to USD 7.5m
in H1 2021 from USD 2.6m in FY 2020.
-- The recovery of our operations was led by strong operational
and financial performance in Ghana, Pakistan and Tanzania, which
delivered substantial OLP growth, PAR>30 of less than 2%, and
substantially increased profitability.
-- Our operations in the Philippines, Nigeria and Kenya also
made significant positive contributions to the Group's net
profitability.
-- The challenging circumstances in India caused the Company to
make an additional ECL expense of USD 15.3m (H1 2020: USD 3.8m) and
a USD 6.8m ECL expense in all other countries than India (H1 2020:
USD 4.5m), which reduced pre-tax profitability accordingly.
-- Following the end of the recent lockdowns in our operating
countries (Sri Lanka, India, the Philippines, Myanmar and Uganda),
the Group granted certain clients a temporary moratorium of the
payment of one or more loan instalments (which, in effect, extended
the related loans for the moratorium period), which peaked at USD
48.3m in June 2021 with 237K clients, mainly in India, benefiting
from the moratorium.
-- PAR>30 decreased from 13.1% to 12.3% (after the
restructuring of loans outstanding of approx. 30% of clients in
India) by the end of June 2021.
-- As of 30 June 2021, the Group had approximately USD 108m of
unrestricted cash and cash equivalents, with a funding pipeline
reaching approximately USD 163m.
-- The Group successfully raised USD 117m in fresh debt to fund its operations.
Outlook
The Company expects the operating environment to remain
challenging in many countries for the second half of 2021 as
vaccination rates have remained relatively low and only recently
began to improve in various countries, especially India. Assuming
that the disruption caused by Covid-19 reduces during the
second-half of the year, the Group's operating and financial
performance is expected to further improve in the second half of
2021 compared with 2020, but with performance largely dependent on
developments in India. We expect that in 2022 the Group's
operational and financial performance should further improve,
subject to the unpredictable course of the pandemic.
Dirk Brouwer, Chief Executive Officer of ASA International,
commented:
"While the operational environment remains challenging, we are
pleased that in the first half of 2021 we have seen positive
developments in terms of portfolio quality, growth and
profitability in some of our major operating countries. While the
course of the pandemic remains unpredictable as we recently
witnessed caused by the Delta variant of Covid-19 in India, Sri
Lanka, Myanmar and to a lesser extent the Philippines, we are
hopeful that with increased vaccination the operating environment
for our clients continues to improve in all our operating
markets.
In some of our major markets, such as Ghana, Pakistan and
Tanzania we already witnessed strong growth, relatively high
profitability combined with a solid portfolio quality. Some of our
other established subsidiaries, such as Nigeria and the
Philippines, also substantially increased their operational
performance and profitability in the first half of 2021. The major
challenge we currently face is how to improve the quality of our
loan portfolio in India. Our field staff In India, actively
supported by our senior management, continue to work very hard to
gradually recover these overdue loans. We are grateful for the
continued and consistent financial support we received from almost
all our lenders in India and are pleased with the resilience shown
by our clients who make such efforts to rebuild their businesses
and service their loans, and, of course, our staff who leave no
stone unturned to encourage our clients to continue servicing their
loans."
CHIEF EXECUTIVE OFFICER'S REVIEW
Business Review H 1 2021
The Company's operational and financial performance
substantially improved in markets such as Pakistan, Ghana, and
Tanzania, which delivered substantial OLP growth and better
portfolio quality. However, operations in India, Philippines, Sri
Lanka, Myanmar and Uganda were affected by the highly infectious
Delta variant of Covid-19 and the associated disruption this caused
to our clients' businesses.
In India, Myanmar and Uganda, we remained focused on the
collection of outstanding loan installments rather than the
disbursement of new loans. In India, moratoriums were granted to
approximately 30% of ASA India's clients under the recent one-time
debt restructuring scheme of the Reserve Bank of India. As at 30
June 2021, we have made provisions for expected credit losses of
USD 28m in India, which represents 18% of our OLP in India.
However, in Pakistan, Ghana, Nigeria, Tanzania and Kenya, the Group
gradually and carefully started to increase its loan disbursements
as demand from clients remained high. This resulted in a 3%
increase of the gross outstanding loan portfolio at a Group level,
from USD 445.3m by year-end 2020 to USD 456.9m as of 30 June 2021.
Gross OLP per Client decreased from USD 187 to USD 182.
After halting branch openings during most of 2020, the number of
branches increased from 1,965 at FY 2020 to 2,036 (+4%), mainly in
Tanzania and Pakistan. The number of clients has returned to 2.5m,
up from 2.4m (+5%) and the number of clients per branch increased
from 1,212 to 1,231.
To anticipate a future with increasingly cashless transactions
and broaden its digital offerings to clients, the Group continued
with the development of a digital financial services ('DFS')
platform and is on track to launch a pilot in Ghana by the middle
of 2022, and, if successful and upon Central Bank approval, this
will be followed by the launch of a range of digital financial
services to all clients in Ghana during the second-half of
2022.
The Group maintained a minimum foreign currency mismatch, and
benefited from the shorter duration of assets vis-à-vis
liabilities, which enabled us to draw some liquidity from the field
at the height of the second wave of the Covid-19 infections.
Compared to 2019 and 2020, operating currencies remained
relatively stable vis-à-vis the US dollar, with the exceptions of
Sri Lanka, Myanmar, Nigeria, and Zambia which have seen significant
depreciation of their currencies.
ECL provision
During H1 2021 the Company increased its provision for expected
credit losses ('ECL') from USD 27.5m to USD 43.4m for the combined
OLP including the off-book BC portfolio. USD 4.1m was also
written-off from the loan portfolio in H1 2021 from the FY 2020 ECL
provision. The related ECL expense amounted to USD 22.1m in H1 2021
compared to USD 8.3m in H1 2020. This increase mainly relates to a
movement of OLP to higher arrears bands and a resulting increase in
the Stage 3 population - focused in certain territories. These
movements were captured via the management overlay which was put in
place for the 31 December 2020 year-end to respond to the
additional risk raised by Covid-19. Management has applied its
previous experiences from natural calamities and other disruptive
events like the Andhra Pradesh crisis and demonetisation in India,
as well as the current developments in each of its operating
companies, to determine the assumptions for the ECL calculation.
The USD 43.4m ECL provision is concentrated in India (64%) and the
Philippines (14%), with the remainder spread more evenly across the
other countries as percentage of each countries outstanding loan
portfolio or as aggregate amount. Following the removal or
relaxation of restrictions in certain countries, collections only
gradually improved as regional restrictions continued in the
Philippines, India and Sri Lanka. The assumptions for the ECL
provision include significant uncertainty. As such, the resulting
outcome of losses on the loan portfolio may be materially
different. Further details on the ECL
calculation are provided in note 2.3.1 of the Interim Financial
Report.
Dividend
Due to the impact of Covid-19 on the Group's financial
performance H1 2021, and the continued uncertainty, the Company
will keep its dividend policy under review until next year.
Management appointment post 30 June 2021
The Group appointed Karin Kersten as Corporate Development
Director as of 1 October 2021. Karin will strengthen the Group's
management team and joins the Company from ABN AMRO Bank, where she
had a distinguished career and most recently was Managing Director
Trade & Commodity Finance.
Webcast and Conference call
Management will be hosting an audio webcast and conference call,
with Q&A today at 14:00 (BST).
To access the audio webcast and download the 2021 H1 results
presentation, please go to the Investor section of the Company's
website: Investors | Asa (asa-international.com) .
or use the following link:
https://webcasting.brrmedia.co.uk/broadcast/613f40d278fd89639eae0fa8
The presentation can be downloaded before the start of the
webcast.
In order to ask questions, analysts and investors are invited to
submit questions via the webcast or dial into the conference call.
Please use the dial-in details below. For dial-in from other
locations, please contact Investor Relations.
You will be asked to provide the following information:
Confirmation code: 1433485
Title of the conference: ASA International Half-year Results
2021
Speaker name: Dirk Brouwer
Location Phone Number
United Kingdom +44 (0)330 336 9434
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+1 929-477-0324
United States +1 323-794-2093
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Netherlands +31 (0)20 703 8259
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South Africa +27 11 844 6054
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+91 11 6310 0156
India +91 22 6310 0143
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Singapore +65 6320 9075
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2021 Interim Financial Report
Today, the Company published the Interim Financial Report for
the 6 months period ended 30 June 2021 on Investors | Asa
(asa-international.com) .
Enquiries:
ASA International Group plc
Investor Relations
Véronique Schyns
+31 6 2030 0139
vschyns@asa-international.com
GROUP FINANCIAL PERFORMANCE
(UNAUDITED) YoY YTD YTD % Change
(Amounts in USD (constant
millions) H1 2021 FY2020 H1 2020 FY 2019 % Change % Change currency)
Profit before tax 7,522 2,578 -2,509 54,336 400% 192% 167%
Net profit 1,442 -1,395 -1,487 34,497 197% 203% 170%
Cost/income ratio 85% 98% 108% 60%
Return on average
assets (TTM)(1) 0.5% -0.2% -0.5% 6.7%
Return on average
equity (TTM)(1) 2.8% -1.3% -2.8% 34.5%
Earnings growth
(TTM)(1) 197% -104% -109% 6%
OLP 415,009 415,304 388,649 467,429 7% -0.1% 2%
Gross OLP 456,925 445,257 411,697 471,420 11% 3% 5%
Total assets 585,300 579,260 530,984 559,958 10% 1%
Client deposits
(2) 86,922 80,174 74,488 78,080 17% 8%
Interest-bearing
debt (2) 334,565 337,632 301,094 317,810 11% -1%
Share capital and
reserves 105,020 107,073 104,131 111,169 1% -2%
Number of clients 2,506,110 2,380,685 2,331,563 2,534,015 7% 5%
Number of branches 2,036 1,965 1,956 1,895 4% 4%
Average Gross OLP
per client (USD) 182 187 177 186 3% -3% -0.2%
PAR > 30 days 12.3% 13.1% 3.0% 1.5%
Client deposits
as % of loan portfolio 21% 19% 19% 17%
(1) TTM refers to trailing twelve months.
(2) Excludes interest payable.
Regional performance
South Asia
(UNAUDITED) YoY YTD YTD % Change
(Amounts in USD (constant
millions) H1 2021 FY2020 H1 2020 FY 2019 % Change % Change currency)
Profit before tax -8,187 -5,537 -179 20,020 -4481% -48% -52%
Net profit -6,414 -4,360 594 14,098 -1179% -47% -51%
Cost/income ratio 335% 134% 99% 50%
Return on average
assets (TTM) -5.5% -1.7% 0.5% 6.1%
Return on average
equity (TTM) -24.4% -7.8% 2.0% 26.6%
Earnings growth
(TTM) -1180% -131% -92% -5%
OLP 207,362 217,843 226,401 254,361 -8% -5% -4%
Gross OLP 237,031 238,738 234,139 256,578 1% -1% 0.2%
Total assets 232,999 253,360 229,747 252,034 1% -8%
Client deposits 2,588 2,610 2,363 2,082 10% -1%
Interest-bearing
debt 170,556 183,756 159,136 177,257 7% -7%
Share capital and
reserves 47,277 53,232 57,777 58,703 -18% -11%
Number of clients 1,231,989 1,185,656 1,191,888 1,234,638 3% 4%
Number of branches 788 758 766 751 3% 4%
Average Gross OLP
per client (USD) 192 201 196 208 -2% -4% -4%
PAR > 30 days 17.4% 21.3% 3.6% 2.0%
Client deposits
as % of loan portfolio 1% 1% 1% 1%
-- Pakistan continued to grow its OLP while maintaining a strong
portfolio quality since the end of 2020.
-- Due to the second wave of infections of Covid-19 and
associated lockdowns, operations were substantially disrupted in
India and Sri Lanka.
-- A shrinking OLP along with increased provisions for expected
credit losses in India as well as currency depreciation in Sri
Lanka (LKR down 8% YTD against USD) led to South Asia's USD net
loss widening to USD 6.4m.
India
ASA India shrank its operations over the past six months:
-- Number of clients down from 714 k to 710 k (down 1 % YTD)
-- Number of branches up from 400 to 409 (up 2% YTD)
-- OLP declined from INR 7.3bn (USD 101m) to INR 6.5bn (USD 87m) (down 12% YTD in INR)
-- Off-book portfolio declined from INR 3.4bn (USD 46.4m) to INR
3.0bn (USD 39.1m) (down 14% in INR). This now includes INR 178.3m
(USD 2.4m) of the portfolio transferred under a direct assignment
(DA) agreement to State Bank of India
-- Gross OLP/Client down from INR 17K to INR 16K (down 5% YTD in INR)
-- PAR>30 decreased from 31.9% to 28.6%
-- USD 48m in moratoriums granted to 226k clients whose loans
were restructured in line with RBI guidelines
Pakistan
ASA Pakistan grew its operations over the past six months:
-- Number of clients increased from 416 k to 4 68 k (up 12% YTD)
-- Number of branches up from 292 to 313 (up 7 % YTD)
-- OLP up from PKR 10.0bn (USD 62.5m) to PKR 11.7bn (USD 73.7m) (up 16 % in PKR)
-- Gross OLP/Client up from PKR 24.8K (USD 155) to PKR 25.5K (USD 1 61 ) ( up 3% YTD in PKR)
-- PAR>30 decreased from 4.0% to 1.5%
-- No moratoriums granted to clients
Sri Lanka
Lak Jaya continued to feel the negative impact of Covid-19 over
the past 6 months:
-- Number of clients down from 56 k to 54 k ( do wn 3% YTD)
-- Number of branches remained at 66
-- OLP down from LKR 1.6n (USD 8.4m) to LKR 1.5bn (USD 7.3m) (down 7% YTD in LKR)
-- Gross OLP/Client up from LKR 30.2K (USD 163) to LKR 30.6K (USD 153) (up 1% YTD in LKR)
-- PAR>30 increased from 7.6% to 12.2%
-- Up to USD 413k in moratoriums granted to 26k clients
South East Asia
(UNAUDITED) YoY YTD YTD % Change
(Amounts in USD (constant
millions) H1 2021 FY2020 H1 2020 FY 2019 % Change % Change currency)
Profit before tax 950 -4,348 -6,424 7,511 115% 122% 116%
Net profit 1,452 -3,366 -3,969 5,349 137% 143% 137%
Cost/income ratio 92% 135% 464% 74%
Return on average
assets (TTM) 2.5% -2.7% -6.7% 4.8%
Return on average
equity (TTM) 14.7% -16.1% -38.3% 29.1%
Earnings growth
(TTM) 137% -163% -274% 38%
OLP 71,279 74,214 68,847 84,205 4% -4% 4%
Gross OLP 79,037 80,832 77,714 84,886 2% -2% 6%
Total assets 120,013 119,152 111,870 125,750 7% 1%
Client deposits 24,572 24,000 23,726 22,995 4% 2%
Interest-bearing
debt 66,656 66,412 59,140 72,419 13% 0.4%
Share capital and
reserves 19,454 20,259 19,964 21,453 -3% -4%
Number of clients 455,197 428,645 448,707 491,813 1% 6%
Number of branches 422 415 416 405 1% 2%
Average Gross OLP
per client (USD) 174 189 173 173 0.3% -8% -0.2%
PAR > 30 days 14.1% 4.1% 1.8% 1.0%
Client deposits
as % of loan portfolio 34% 32% 34% 27%
-- Philippines improved its collection efficiency and returned
towards growth of its OLP, although its low portfolio quality
required a significant ECL provision.
-- In Myanmar, client and OLP growth stalled due in large part
to disruptions brought on by civil unrest and Covid-19.
The Philippines
Pagasa Philippines operations grew over the last 6 months
despite the impact from COVID-19:
-- Number of clients up from 299k to 336k (up 12% YTD)
-- Number of branches up from 322 to 326 (up 1% YTD)
-- OLP up from PHP 2.2bn (USD 45.3m) to PHP 2.4bn (USD 49.3m) (up 11% YTD in PHP)
-- Gross OLP/Client decreased from PHP 8.1K (USD 168) to PHP 8.0
K (USD 1 64 ) (down 1% YTD in PHP)
-- PAR>30 increased from 6.4% to 19.9% following a reduction
of the amounts of moratoriums granted
-- Up to USD 36k in moratoriums granted to 1.6k clients
Myanmar
ASA Myanmar saw a decline in clients and OLP over the trailing
six months:
-- Number of clients down from 129k to 1 19 k (down 8% YTD)
-- Number of branches increased from 93 to 96 (up 3 % YTD)
-- OLP down from to MMK 38.4bn (USD 28.9m) to MMK 36.1bn (USD 21.9m) (down 6% YTD in MMK)
-- Gross OLP/Client up from MMK 316K (USD 237) to MMK 332K (USD 202) (up 5% YTD in MMK)
-- PAR>30 increased from 0.5% to 0.7%
-- Up to USD 5.1m in moratoriums granted to 235k clients
West Africa
(UNAUDITED) YoY YTD YTD % Change
(Amounts in USD (constant
millions) H1 2021 FY2020 H1 2020 FY 2019 % Change % Change currency)
Profit before tax 15,859 19,268 7,375 23,113 115% -18% -18%
Net profit 10,826 13,443 5,297 15,935 104% -19% -20%
Cost/income ratio 39% 49% 55% 45%
Return on average
assets (TTM) 20.0% 13.2% 11.2% 17.3%
Return on average
equity (TTM) 45.5% 31.1% 28.5% 45.7%
Earnings growth (TTM) 104% -16% -25% -6%
OLP 81,905 77,835 56,647 77,200 45% 5% 8%
Gross OLP 84,007 79,499 60,237 78,078 39% 6% 9%
Total assets 122,729 107,748 93,962 95,240 31% 14%
Client deposits 43,506 39,788 34,809 38,195 25% 9%
Interest-bearing
debt 9,427 10,255 11,212 11,919 -16% -8%
Share capital and
reserves 58,204 49,033 37,003 37,452 57% 19%
Number of clients 446,727 447,122 389,453 459,022 15% -0.1%
Number of branches 440 433 431 423 2% 2%
Average Gross OLP
per client (USD) 188 178 155 170 22% 6% 9%
PAR > 30 days 2.4% 2.7% 3.1% 1.5%
Client deposits as
% of loan portfolio 53% 51% 61% 49%
-- West Africa's operational and financial performance continued
to improve despite the market environment still being challenging
due to Covid-19.
-- A depreciation of NGN (7% down against USD in H1 2021)
impacted profitability and OLP growth in USD terms.
Ghana
ASA Savings & Loans operations improved with OLP above
pre-Covid levels with excellent portfolio quality:
-- Number of clients down from 158k to 156k (down 1% YTD)
-- Number of branches up from 129 to 133 (up 3% YTD)
-- OLP up from GHS 248.3m (USD 42.3m) to GHS 267.5 m (USD 45.6m) (up 8% YTD in GHS)
-- Gross OLP/Client up to GHS 1.7k (USD 293) (up 9% YTD in GHS)
-- PAR>30 decreased from 0.4% to 0.3%
-- No moratoriums granted to clients
Nigeria
ASA Nigeria saw an improvement of operations with OLP also above
pre-COVID levels in NGN:
-- Number of clients down from 253k to 251k (down 1% YTD)
-- Number of branches maintained at 263
-- OLP up from NGN 12.0bn (USD 31.2m) to NGN 12.7bn (USD 30.8m) (up 5% YTD in NGN)
-- Gross OLP/Client up from NGN 50k (USD 129) to NGN 53k (USD 129) (up 8% YTD in NGN)
-- PAR>30 decreased from 5.5% to 5.0%
-- No moratoriums granted to clients
Sierra Leone
ASA Sierra Leone continued to successfully expand with client,
branch and OLP growth:
-- Number of clients up from 36k to 40k (up 9% YTD)
-- Number of branches up from 41 to 44 (up 7% YTD)
-- OLP up from SLL 43.6bn (USD 4.3m) to SLL 57.1bn (USD 5.6m) (up 31% YTD in SLL)
-- Gross OLP/Client up from SLL 1.2m (USD 123) to SLL 1.5m (USD 146) (up 20% YTD in SLL)
-- PAR>30 declined from 4.4% to 4.3%
-- No moratoriums granted to clients
East Africa
(UNAUDITED) YoY YTD YTD % Change
(Amounts in USD (constant
millions) H1 2021 FY2020 H1 2020 FY 2019 % Change % Change currency)
Profit before tax 2,293 1,652 234 8,785 881% 39% 39%
Net profit 1,414 1,069 333 6,160 324% 32% 32%
Cost/income ratio 79% 90% 97% 62%
Return on average
assets (TTM) 4.4% 1.8% 1.2% 12.6%
Return on average
equity (TTM) 17.6% 6.7% 4.3% 51.0%
Earnings growth
(TTM) 325% -83% -87% 69%
OLP 54,464 45,413 36,753 51,664 48% 20% 19%
Gross OLP 56,850 46,188 39,607 51,878 44% 23% 22%
Total assets 73,954 59,802 55,856 59,356 32% 24%
Client deposits 16,256 13,776 13,591 14,808 20% 18%
Interest-bearing
debt 36,917 26,292 24,245 25,835 52% 40%
Share capital and
reserves 16,728 16,313 15,408 15,476 9% 3%
Number of clients 372,197 319,262 301,515 348,542 23% 17%
Number of branches 386 359 343 316 13% 8%
Average Gross OLP
per client (USD) 153 145 131 149 16% 6% 5%
PAR > 30 days 6.5% 13.2% 1.7% 0.6%
Client deposits
as % of loan portfolio 30% 30% 37% 29%
-- East Africa saw an improvement in operational performance and
profitability due to continued growth in Tanzania and improvements
in the operating environment in Kenya and Rwanda.
-- Uganda operations declined in the first of half of 2021 due
to the return of national and regional lockdowns.
Kenya
ASA Kenya expanded its operations over the six-month period:
-- Number of clients up from 92k to 112k (up 22% YTD) and above pre-Covid-19 levels
-- Number of branches up from 100 to 105 (up 5% YTD)
-- OLP up from KES 1.4bn (USD 12.7m) to KES 1.7bn (USD 15.7m) (up 22% YTD in KES)
-- Gross OLP/Client up from KES 15K (USD 142) to KES 16K (USD 150) (up 4% YTD in KES)
-- PAR>30 decreased from 21.9% to 11.4%
-- No moratoriums granted to clients
Uganda
ASA Uganda saw a contraction in operations over the last six
months following further lockdowns due to Covid-19 infections:
-- Number of clients up from 81k to 85k (up 5% YTD)
-- Number of branches up from 98 to 103 (up 5% YTD)
-- OLP down from UGX 29.3bn (USD 8.0m) to UGX 28.0bn (USD 7.9m) (down 4% YTD in UGX)
-- Gross OLP/Client down from UGX 366K (USD 100) to UGX 357K (USD 100) (down 2% YTD in UGX)
-- PAR>30 decreased from 29.1% to 12.7%
-- No moratoriums granted to clients
Tanzania
ASA Tanzania managed to significantly expand its operations over
the last six months:
-- Number of clients up from 121k to 147k (up 22% YTD)
-- Number of branches up from 121 to 135 (up 12% YTD)
-- OLP up from TZS 49.6bn (USD 21.4m) to TZS 63.3bn (USD 27.3m) (up 28% YTD in TZS)
-- Gross OLP/Client up from TZS 413k (USD 178) to TZS 436k (USD 188) (up 6% YTD in TZS)
-- PAR>30 decreased from 2.5% to 1.6%
-- No moratoriums granted to clients
Rwanda
ASA Rwanda saw an increase in OLP despite having fewer clients
over the last six months:
-- Number of clients declined from 19k to 17k (down 11% YTD)
-- Number of branches maintained at 30
-- OLP down from RWF 2.9bn (USD 2.9m) to RWF 2.8bn (USD 2.8m) (down 4% YTD in RWF)
-- Gross OLP/Client up from RWF 151K (USD 153) to RWF 167K (USD 170) (up 11% YTD in RWF)
-- PAR>30 decreased from 10.1% to 8.4%
-- No moratoriums granted to clients
Zambia
ASA Zambia managed to expand its operations:
-- Number of clients increased from 5k to reach 10k
-- Number of branches increased from 10 to 13
-- OLP up from ZMW 7.9m (USD 372k) to ZMW 18.6m (USD 823k)
-- Gross OLP/Client up from ZMW 1.6k (USD 76) to ZMW 1.9k (USD 86)
-- PAR>30 declined to 1.1%
-- No moratoriums granted to clients
Regulatory environment
The Company operates in a wide range of jurisdictions each with
their own regulatory regimes applicable to microfinance
institutions.
Key events 2021
India
-- In June, RBI proposed new uniform regulations for all lenders
in microfinance, including banks, which had fewer restrictions so
far compared to Non-Banking Financial Company Microfinance
Institutions ('NBFC-MFIs').
-- In August, ASA India and other MFIs signed the 'Assam
Microfinance Incentive and Relief Scheme 2021', a Memorandum of
Understanding with the government of the State of Assam, with the
objective to give incentives and relief to borrowers, who availed
small loans from different MFIs in Assam. The specific objectives
of the Scheme are as follows:
o providing relief to stressed borrowers to encourage and help
them to regularise their repayments;
o providing partial/full relief from repaying loans to destitute
borrowers with no capacity to repay; and
o incentivizing borrowers for making regular repayments and
maintaining good credit discipline.
Pakistan
-- State Bank of Pakistan completed the inspection of ASA
Pakistan in August. ASA Pakistan is now awaiting the final license
(which may contain certain conditions to be fulfilled by ASA
Pakistan to fully avail of the deposit taking license).
Sri Lanka
-- The microfinance sector has not yet fully recovered from
three major events that occurred during the past years, including
(i) the introduction of the government backed debt relief programme
for microfinance loans in drought affected districts of Sri Lanka
in 2018, that eroded the repayment discipline of clients across the
country, whose after-effects still persisted in 2019, (ii) the 2019
Easter Sunday bomb attack and the knock-on effect on the economy,
and (iii) the spread of Covid-19 in 2020. In addition, due to
overall interest rate cuts by the Government in the financial
sector following the economic downturn due to Covid-19, there is
concern that the interest rate cap of 35% introduced 2020 may be
further reduced.
-- Nationwide curfew and lockdowns were imposed from 20 August until 21 September.
The Philippines
-- In the Philippines, the capital region of Manila was placed
under a strict lockdown from 6 August until 20 August.
Myanmar
-- Disruptions and civil unrest in Myanmar following the
military's takeover of the Government in February 2021 with
nationwide protests and any related governmental measures are
impacting the operations.
-- Public holiday declared from 17 July up to 10 September.
Ghana
-- The suspension on dividends which was imposed in 2020 was
removed by the Bank of Ghana in April 2021. Dividends can be
declared subject to certain requirements and approval by the Bank
of Ghana.
Tanzania
-- ASA Tanzania received a non-deposit taking license in June
2021 and is preparing the application for a full deposit taking
license.
Regulatory Capital
Many of the Group's operating subsidiaries are regulated and
subject to minimum regulatory capital requirements. As of 30 June
2021, the Group and its subsidiaries were in full compliance with
minimum regulatory capital requirements.
Asset/Liability and Risk Management
ASA International has strict policies and procedures for the
management of its assets and liabilities as well as various
non-operational risks to ensure that:
-- The average tenor of loans to customers is substantially
shorter than the average tenor of debt provided by third party
banks and other third-party lenders to the Group and any of its
subsidiaries.
-- Foreign exchange losses are minimized by having all loans to
any of the Group's operating subsidiaries denominated or duly
hedged in the local operating currency and all loans to any of the
Group's subsidiaries denominated in local currency are hedged in US
dollars.
-- Foreign translation losses affecting the Group's balance sheet are minimised by preventing over-capitalisation of any of the Group's subsidiaries by distributing dividends and/or repaying capital as soon as reasonably possible.
Nevertheless, the Group will always remain exposed to currency
movements in both (i) the profit & loss statement, which will
be affected by the translation of profits in local currencies into
USD, and (ii) the balance sheet, due to the erosion of capital of
each of its operating subsidiaries in local currency when
translated in USD, in case the US dollar strengthens against the
currency of any of its operating subsidiaries.
Funding
The funding profile of the Group has not materially changed
during H1 2021:
In USD millions
30 Jun 31 Dec 30 Jun 31 Dec
21 20 20 19
Local Deposits 86.9 80.2 74.5 78.1
Loans from Financial Institutions 280.6 274.1 232.8 260.6
Microfinance Loan Funds 14.0 23.5 28.3 27.2
Loans from Dev. Banks & Foundations 40.0 40.0 40.0 30.0
Equity 105.0 107.1 104.1 111.2
------- ------- ------- -------
Total Funding 526.5 524.9 479.7 507.1
======= ======= ======= =======
The Group maintains a favourable maturity profile with the
average tenor of all funding from third parties being substantially
longer than the average tenor at issuance of loans to customers
which ranges from 6-12 months for the bulk of the loans.
The Group and its subsidiaries have existing credit
relationships with more than 50 lenders throughout the world, which
has provided reliable access to competitively-priced funding for
the growth of its loan portfolio.
Some subsidiaries did not fulfil certain covenant ratios as
required in the contracts for credit lines amounting to USD 158m in
H1 2021. The Group has already received waivers from its lenders
against all breaches except for loans amounting to a total of USD
54m.The balance is presented in our financial statements as on
demand as at 30 June 2021. However, waivers for the majority of
these loans have been approved and are in the final process of
documentation. No lender requested early repayment of any of the
remaining loans.
The Company has also received temporary waivers, no action
and/or comfort letters from most of its major lenders for the
remainder of 2021 due to expected portfolio quality covenant
breaches. The impact of these potential covenant breaches was
further assessed in the evaluation of the Company's going concern
as disclosed in note 2.1.2 of the Interim Financial Report, where
the Directors have concluded that there is a material uncertainty
that may cast significant doubt over the Group's ability to
continue as a going concern.
The Group is exploring possibilities to raise some local
(Indian) equity capital to strengthen the balance sheet of ASA
India, in view of the increasing amount of ECL reserves in
India.
Impact of foreign exchange rates
As a USD reporting company with operations in thirteen different
currencies, currency movements can have a major effect on the
Group's USD financial performance and reporting.
The effect of this is that (i) existing and future local
currency earnings translate into less US dollar earnings, and (ii)
local currency capital of any of the operating subsidiaries will
translate into less US dollar capital.
Countries H1 2021 FY 2020 H1 2020 FY 2019 <DELTA> <DELTA>
H1 2020 FY 2020
- H1 2021 - H1
2021
India (INR) 74.3 73.0 75.3 71.3 1% (2%)
Pakistan (PKR) 158.1 160.3 168.0 154.8 6% 1%
Sri Lanka (LKR) 199.5 185.3 186.4 181.4 (7%) (8%)
The Philippines
(PHP) 48.8 48.0 49.8 50.7 2% (2%)
Myanmar (MMK) 1647.0 1330.7 1382.2 1487.0 (19%) (24%)
Ghana (GHS) 5.9 5.9 5.8 5.7 (1%) (0%)
Nigeria (NGN) 411.4 384.6 387.7 362.5 (6%) (7%)
Sierra Leone
(SLL) 10252.6 10107.0 9748.9 9782.7 (5%) (1%)
Kenya (KES) 107.9 109.0 106.6 101.4 (1%) 1%
Uganda (UGX) 3557.5 3647.7 3733.5 3665.4 5% 2%
Tanzania (TZS) 2319.1 2317.2 2316.7 2298.0 (0%) (0%)
Rwanda (RWF) 986.5 986.4 954.2 943.2 (3%) (0%)
Zambia (ZMW) 22.7 21.1 18.2 14.1 (25%) (7%)
During H1 2021, the US dollar particularly strengthened against
LKR +8%, MMK +24%, NGN +7%, and ZMW +7% as a result of the impact
of COVID-19 on the individual countries and global economy. This
had an additional negative impact on the USD earnings contribution
of these subsidiaries to the Group and also contributed to an
increase in foreign exchange translation losses. The total
contribution to the foreign exchange translation loss reserve
during H1 2021 amounted to USD 4.0m of which USD 1.5m related to
the depreciation of the NGN, and USD 2.2m to depreciation of the
MMK.
Forward Looking Statement and Disclaimers
This announcement does not constitute or form part of any offer
or invitation to purchase, otherwise acquire, issue, subscribe for,
sell or otherwise dispose of any securities, nor any solicitation
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END
IR SESFUSEFSELU
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