2020 Group financial performance

 

(IN USD THOUSANDS)

 

FY2020

 

H1 2020

 

FY 2019

% Change FY 2019 – 2020

% Change FY 2019 – 2020 CC
% Change H1 2020 – FY 2020
Net profit -1,395 -1,487 34,497 -104% -103% 6%
Cost/income ratio 98% 108% 60%      
Return on average assets  -0.2% -0.5% 6.7%       
Return on average equity  -1.3% -2.8% 34.5%      
Earnings growth -104% -109% 6%      
OLP1 415,304 388,649 467,429  -11% -10% 7%
Gross OLP 445,257 411,700 471,420 -6% -4% 8%
Total assets 579,260 530,984 559,958 3%   9%
Client deposits2 80,174 74,488  78,080 3%    8%
Interest-bearing debt2 337,632 301,094 317,810  6%   12%
Share capital and reserves 107,073 104,131 111,169 -4%    3%
Number of clients 2,380,685 2,331,563 2,534,015 -6%    2%
Number of branches 1,965 1,956 1,895 4%    0%
Average Gross OLP per client (USD) 187 177 186 1% 2% 6% 
PAR>30 days 13.1% 3.6% 1.5%      
Client deposits as % of loan portfolio  19% 19%  17%       

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. Excludes interest payable

“Our clients have shown strong resilience in rebuilding their businesses and adjusting to the new operating circumstances. This ability to recover from adverse circumstances together with our support in providing more time for clients to settle their loans, enabled many clients to increase their earnings capacity and gradually repay in full the loans granted by the Group.”

Dirk Brouwer - CEO, ASA International Group plc

  • The Company’s operational and financial performance was substantially affected by the impact of the COVID-19 pandemic, including the associated disruption and measures taken by government authorities, as well as the ensuing provisioning across all operating companies.
  • As a result, the Company showed a net loss of USD 1.4m in 2020 compared to a net profit of USD 34.5m in 2019.
  • The reduction in profitability was primarily caused by (i) a USD 27.2m expense for expected credit losses in 2020 compared to USD 4.2m in 2019, (ii) lower interest income as the Group was not able to charge interest in most markets on (a) the payment holidays provided during lockdowns, moratoriums and (b) increased overdue amounts and (iii) a modification loss of USD 3.5m at the end of the year due to loan extensions for the payment holidays provided to clients on account of COVID-19 related lockdowns and moratoriums.
  • The immediate health impact on our staff and clients remained relatively low with no deaths amongst our approximately 12.5K employees and 25 deaths amongst our 2.4 million clients due to COVID-19.
  • Following the end of the lockdowns in our operating countries, the Group granted many 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 16.9m in June with 485K clients benefiting from the moratorium.
  • PAR>30 increased to 13.1% (excluding loan instalments under moratorium) by the end of December 2020.
  • As of 31 December 2020, the Group had approximately USD 101m of unrestricted cash and cash equivalents, with a funding pipeline reaching approximately USD 225m.
  • The Group successfully raised USD 163.9m in debt funding across its operations in 2020, with total debt growing to USD 337.6m.

In 2021, the Company expects the operating environment to remain challenging in many countries. Assuming that the disruption caused by COVID 19 reduces through the rest of the year, the Group’s operating and financial performance should improve meaningfully in 2021 compared with 2020, with the extent of that improvement depending in particular on developments in India. It is expected that in 2022 the Group’s operational and financial performance will begin to normalise, subject to the unpredictable course of the pandemic.

Due to the impact of COVID-19 on the Group’s financial performance during 2020 and the resulting uncertainty, the Board decided not to declare a dividend on earnings for the year 2020. The Company will review its dividend policy during the course of the year.

DIRK BROUWER, CHIEF EXECUTIVE OFFICER OF ASA INTERNATIONAL, COMMENTED:

“Considering the challenging operating circumstances in 2020, we are pleased with the resilience of the business and its model, and especially how local management navigated the operating subsidiaries through the crisis. From the start of the COVID-19 pandemic our field staff stayed in close contact with our clients and supported them throughout these difficult times, which prevented many of our clients from doing their regular daily business.

Our clients have shown strong resilience in rebuilding their businesses and adjusting to the new operating circumstances. This ability to recover from adverse circumstances together with our support in providing more time for clients to settle their loans, enabled many clients to increase their earnings capacity and gradually repay in full the loans granted by the Group. In India and the Philippines, many clients were not able to meet their financial obligations towards the Company. In addition to the ongoing disruption as a result of COVID-19 and the impact of cyclone Amphan, which hit our operations in West-Bengal, political activism against MFIs adversely affected the repayment discipline of many clients in the State of Assam, covering 13% of our portfolio in India at 30 April 2021. The Philippines also struggled to increase collection efficiency to satisfactory levels, following disruptions caused by the initial two months lockdown and the many subsequent ongoing local restrictions imposed by local, regional governments as well as the national government.

We considered it therefore appropriate to substantially increase the provision for expected credit losses from USD 10.6 million in June 2020 to USD 27.5 million by year-end 2020. As a result, together with the lower interest income due to the lockdowns, moratoriums and overdue, this increased the net loss of the Group for 2020 to USD 1.4 million.

At 30 April 2021, despite ongoing COVID-19 related disruptions in the Philippines and India, and political unrest in Myanmar, the Group’s other operating subsidiaries, where traditionally more than two-thirds of our customary operating profits are generated, achieved a collection efficiency of more than 90% and 9 out of 13 countries achieved a collection efficiency of more than 95%. As a result, the PAR>30 of the Group’s operating subsidiaries, excluding India, the Philippines and Myanmar, came down to 3.8%.

We are grateful for the solid and consistent financial support we received from almost all our lenders since the start of the pandemic. The Group secured in excess of USD 219 million of new credit facilities since the start of the pandemic in March 2020. As of 30 April 2021, liquidity remains high. The Group had a pipeline of wholesale loans of 164 million from a large variety of local and international lenders.”