Group financial performance
|
(UNAUDITED) |
FY 2023 |
H1 2023 |
FY 2022 |
% Change |
% Change |
% Change |
| Profit before tax(1) | 32,195 | 13,815 | 46,281 | -30% | -16% | 33% |
| Net profit | 8,757 | 3,676 | 17,887 | -51% | -31% | 38% |
| Cost/income ratio | 72% | 77% | 68% | |||
| Return on average assets (TTM)(2) | 1.8% | 1.5% | 3.4% | |||
| Return on average equity (TTM)(2) | 10.5% | 8.7% | 18.5% | |||
| Earnings growth (TTM)(2) | -51% | -72% | 181% | |||
| OLP | 369,215 | 334,400 | 351,151 | 5% | 21% | 10% |
| Gross OLP | 377,219 | 346,804 | 367,535 | 3% | 18% | 9% |
| Total assets | 490,027 | 452,332 | 489,752 | 0.1% | 8% | |
| Client deposits(3) | 79,073 | 72,718 | 84,111 | -6% | 9% | |
| Interest-bearing debt(3) | 268,464 | 245,314 | 257,466 | 4% | 9% | |
| Share capital and reserves | 76,611 | 69,249 | 89,661 | -15% | 11% | |
| Number of clients | 2,330,498 | 2,224,542 | 2,299,558 | 1% | 5% | |
| Number of branches | 2,016 | 2,073 | 2,028 | -1% | -3% | |
| Average Gross OLP per client (USD) | 162 | 156 | 160 | 1% | 16% | 4% |
| PAR>30 days | 2.1% | 3.8% | 5.9% | |||
| Client deposits as % of loan portfolio |
21% | 22% | 24% | |||
| Debt-to-equity ratio | 3.5% | 3.5% | 2.9% |
(1) Profit before tax and net profit for FY 2023 include an IAS 29 hyperinflation adjustments loss of USD 5.4 million, and profit before tax and net profit for H1 2023 excludes hyperinflation adjustments, as hyperinflation accounting was applied for the first time in the 2023 consolidated financial statements.
(2) TTM refers to the previous 12 months.
(3) Excludes interest payable.
"We are pleased that the Group has returned to seeing growth in its operations and increased profitability in H2 2023, with the operating environment and profits improving across most of the Group’s operating markets when compared to the first half of the year.”
Karin Kersten – CEO, ASA International Group Plc
- The Company’s financial results improved in H2 2023 with net profit increasing to USD 8.8 million by year end 2023 from USD 3.7 million in H1 2023. The Company’s overall FY 2023 financial performance decreased compared to FY 2022, with net profit declining by 51%, primarily due to adverse FX movements, demonetisation in Nigeria, and the application of hyperinflation accounting to Ghana and Sierra Leone.
- The impact of the application of hyperinflation accounting for Ghana and Sierra Leone caused a decrease in net profit by USD 5.4 million and an increase in total equity of USD 0.6 million in 2023. This adjustment was not included in the reported H1 2023 numbers as the application of IAS 29 Hyperinflation accounting occurred for the first time in these consolidated accounts for the financial year ended 31 December 2023.
- Pakistan, the Philippines, Ghana, Tanzania, and Kenya made significant positive contributions to the Group’s net profitability, due to increased loan demand and high loan portfolio quality in all these markets.
- Group operating results improved in H2 2023 with OLP growing by 10% to USD 369.2 million from USD 334.4 million in H1 2023, and portfolio quality improved to 2.1% as of 31 December 2023 from 3.8% as of 30 June 2023. The 5% year-on-year OLP growth in USD (21% in constant currency) was driven by improved performances in Pakistan, the Philippines, Ghana, Tanzania, and Kenya.
- High portfolio quality has been maintained as a result of improvements in the operating environments. PAR>30 for the Group’s operating subsidiaries significantly improved from 5.9% as at 31 December 2022 to 2.1% as at 31 December 2023, primarily due to write-offs of long overdue loans in India and Myanmar, combined with growth in OLP in US Dollar terms in other major countries. Pakistan, Ghana, and Kenya had an outstanding portfolio quality in the period, with PAR>30 less than 0.5% as at 31 December 2023.
- Reserves for expected credit losses (‘ECL’) on OLP in the balance sheet, including the off-book BC portfolio in India and interest receivables, reduced to USD 8.3 million in FY 2023 from USD 16.9 million in FY 2022. The decrease primarily relates to write-off of the outstanding Covid-affected portfolio and improved portfolio quality.
- The devaluation of our operating currencies contributed to foreign exchange translation losses of USD 24.1 million in FY 2023 (FY 2022: USD 34.0 million) and a decrease of the Company’s total equity from USD 89.7 million as at 31 December 2022 to USD 76.6 million as at 31 December 2023.
- The Group did not recognise deferred tax assets amounting to USD 5.6 million which related to past losses for mainly India, as it failed to meet the future profitability threshold required under IFRS. Additionally, prior year tax adjustments of USD 3.0 million primarily in Pakistan, India, Tanzania, and Nigeria were taken in 2023. These resulted in a substantial increase in our tax expenses and a high effective tax rate for FY 2023.
- The unrestricted cash and cash equivalents remained at a healthy level of USD 48 million as of 31 December 2023 (31 December 2022: USD 55 million). The Company maintains a significant funding pipeline.
The outlook for 2024 remains positive with improved business performance expected for our operations compared to 2023 on the back of better performance in H2 2023. However, inflation and related foreign exchange (‘FX’) movements are expected to continue to impact the Group’s operating subsidiaries’ performances. The reported net income for the Group will also depend on which countries will be classified as hyperinflationary at the end 2024. Based on current preliminary inflation projections, it is expected that the accounting for hyperinflation will be applicable for Ghana and Sierra Leone in 2024. Pakistan and Nigeria are currently on the watchlist.
Karin Kersten, CHIEF EXECUTIVE OFFICER OF ASA INTERNATIONAL, COMMENTED:
“We are pleased that the Group has returned to seeing growth in its operations and increased profitability in H2 2023, with the operating environment and profits improving across most of the Group’s operating markets when compared to the first half of the year. Demand has picked up as our clients and staff continued to demonstrate their resilience while operating in economic circumstances that have remained challenging. This activity and resilience led to an improved performance in our major operating countries, Pakistan, the Philippines, Ghana, Kenya, and Tanzania, almost all of which recorded excellent portfolio quality, growth, and profitability. As previously announced, against the backdrop of global market volatility, the improved performance in our major operating markets was offset by FX movements in these markets which has significantly impacted the Group OLP and profitability in USD terms.
We are excited to observe the rollout of the new Core Banking System in Pakistan and Ghana in 2024, in line with the implementation of our digital strategy.
Whilst the impact of inflation including hyperinflation accounting and the related FX movements are expected to continue to dampen the Group’s financial performance in USD terms in 2024, given improved operating developments in H2 2023, we are confident of being able to deliver improved performance within our operations in 2024.”