Letshego recovers but knocks BIHL again
Lewanika Timothy | Monday September 9, 2024 10:12
BIHL’s half-year financial results, posted last week, revealed a dip in the group’s operating profit coupled with a sharp decline in accounted earnings which dropped by 39% due to “underperformance of Letshego Africa Holdings as impairments continued to surge”. According to the group’s financial report, impairments in earnings were eroded by an array of difficult macroeconomic conditions as well as by Letshego’s performance.
“The group’s operating profit declined by 24% for the period ended June 30, 2024, compared to the prior year,” BIHL directors reported. “Equity-accounted earnings decreased by 39% mainly due to the underperformance from Letshego Africa Holdings Limited as impairments continued to surge. ‘The group equity value decreased to P5.27 billion from P5.56 billion recorded in June 2023. “The decrease in group equity value is driven by a decrease in the net asset value, especially Letshego whose carrying value was impaired by P189 million.”
BIHL, the country’s largest diversified financial services group which holds 30% in Letshego, has been a loyal shareholder to the microlender, riding through recent years of sliding profit contributions and growth. Divergent views on whether Letshego should retain some of its East and West Africa investments have, however, with time forced BIHL to speak publicly about its unhappiness with Letshego’s performance.
During BIHL’s interim results announcement last week, Group CEO, Catherine Lesetedi said that Letshego had impaired the group’s revenue and that while there was some positive contribution to the top line 'it was not enough to positively impact key financial metrics'.
“Letshego is still under pressure and it is not meeting expectations. The turnaround needs to trickle down to the bottom line,” she said.
Letshego in the half year to June 2024, posted after-tax profits of P17.8 million, swinging back from a full-year loss of P149 million in 2023. The microlender’s numbers have generally been harmed by investments in difficult markets such as Nigeria and Tanzania due to inflationary pressures and subdued macroeconomic growth.
Despite the turnaround in profit, Letshego Holdings did not declare a dividend to shareholders with CEO, Aupa Monyatsi, saying it was too early to clearly predict how the microlender will close out the year as macroeconomic pressures persist with the ability to cramp borrowing by customers.