2023 Group financial performance
|
(UNAUDITED) |
H1 2023 |
FY 2022 |
H1 2022 |
FY 2021 |
YoY % |
YTD % Change |
YoY % Change |
| Profit before tax | 13,815 | 46,281 | 23,843 | 25,705 | -42% | -40% | -31% |
| Net profit | 3,676 | 17,887 | 13,079 | 6,358 | -72% | -59% | -45% |
| Cost/income ratio | 77% | 68% | 66% | 77% | |||
| Return on average assets (TTM)(1) | 1.5% | 3.4% | 4.6% | 1.1% | |||
| Return on average equity (TTM)(1) | 8.7% | 18.5% | 25.5% | 6.0% | |||
| Earnings growth (TTM)(1) | -72% | 181% | 807% | 556% | |||
| OLP | 334,400 | 351,151 | 378,371 | 403,738 | -12% | -5 | 6% |
| Gross OLP | 346,804 | 367,535 | 398,990 | 430,698 | -13% | -6% | 5% |
| Total assets | 452,332 | 489,752 | 546,093 | 562,554 | -17% | -8% | |
| Client deposits(2) | 72,718 | 84,111 | 86,291 | 87,812 | -16% | -14% | |
| Interest-bearing debt(2) | 245,314 | 257,466 | 299,652 | 314,413 | -18% | -5% | |
| Share capital and reserves | 69,249 | 89,661 | 100,451 | 103,443 | -31% | -23% | |
| Number of clients | 2,224,542 | 2,299,558 | 2,403,172 | 2,380,690 | -7% | -3% | |
| Number of branches | 2,073 | 2,028 | 2,129 | 2,044 | -3% | 2% | |
| Average Gross OLP per client (USD) | 156 | 160 | 166 | 181 | -6% | -2% | 8% |
| PAR>30 days | 3.8% | 5.9% | 5.1% | 5.2% | |||
| Client deposits as % of loan portfolio |
22% | 24% | 23% | 22% |
(1) TTM refers to trailing twelve months.
(2) Excludes interest payable.
"The operating environment in some of our major operating entities has been very challenging during the first six months of the year. In particular, the unprecedented currency depreciation and inflation in some of our key markets are the main drivers. Having travelled recently to multiple of our operations, I see that our clients are struggling with rising food and fuel prices."
Karin Kersten – CEO, ASA International Group Plc
- The Company’s operational performance in constant currency terms improved compared to the end of 2022, with OLP growing by 6% in constant currency terms.
- Operational and financial results decreased in USD terms, with profit before tax decreasing to USD 13.8 million in H1 2023 from USD 23.8 million in H1 2022.
- The decline in profits was primarily due to (i) lower recovery of overdue loans in India, (ii) higher ECL expense of USD 2.8 million charged to the income statement, (iii) significant devaluations of our operating currencies vis-a-vis the USD in H1 2023 especially in our major markets of Pakistan (down 27%), Ghana (down 12%), Nigeria (down 70%) and Kenya (down 14%), and (iv) provision of USD 1.4 million for additional super-tax charged in Pakistan applied on H1 2023 results and retrospectively on FY 2022 results.
- Pakistan, the Philippines, Ghana and Tanzania made significant positive contributions to the Group’s net profitability, due to high loan portfolio quality in all these markets and no significant currency devaluations in the Philippines and Tanzania.
- PAR>30 for the Group’s operating subsidiaries improved to 3.8% in H1 2023 from 5.1% in H1 2022, primarily due to the improving portfolio quality across most markets with the exceptions of India and Nigeria.
- The Company increased expected credit losses (‘ECL’) charged to the Income Statement to USD 2.8 million (H1 2022: USD 1.9 million and FY 2022: USD 0.6 million), primarily due to (i) low portfolio quality in India, and (ii) deteriorating portfolio quality in Nigeria due to the adverse impact on operations from the national elections and demonetization. Reserves for ECL on OLP in the Balance Sheet, including the off-book BC portfolio in India and interest receivables, reduced to USD 13.3 million in H1 2023 from USD 22.0 million in H1 2022.
- The devaluations of our operating currencies contributed to an increase in foreign exchange translation losses from USD 17.7 million in H1 2022 to USD 24.8 million in H1 2023 and a decrease of the Company’s total equity from USD 100.5 million in H1 2022 to USD 69.2 million in H1 2023.
- The Group’s cash and cash equivalents reduced to approximately USD 45 million as of 30 June 2023 from approximately USD 91 million as of 30 June 2022, following large debt settlements primarily in India. The Company has a significant funding pipeline of USD 181 million and raised USD 75 million in new debt in H1 2023.
We continue to see improvements in the operating markets with stability returning to markets that were recently adversely impacted by political and economic events. As such, we continue to expect the Group’s operational performance in terms of OLP growth and portfolio quality to improve in the second half of 2023. However, based on developments in the first half of 2023 and in the current macro environment, we expect net profit to be lower this year compared to 2022. The reasons for this are related to (i) demonetization and further inflation impact on our operations in Nigeria, (ii) further devaluation of operating currencies against USD year-to-date in Pakistan, Ghana, Kenya and Nigeria, and (iii) incidental tax claims in some of our jurisdictions, including higher taxes now applicable in Pakistan than expected.
Although the Board planned to return to its pre-Covid dividend policy in 2024 on the 2023 results, given the tough market circumstances, the company believes it is prudent not to commit to a dividend payment at this stage.
Karin Kersten, CHIEF EXECUTIVE OFFICER OF ASA INTERNATIONAL, COMMENTED:
“The operating environment in some of our major operating entities has been very challenging during the first six months of the year. In particular, the unprecedented currency depreciation and inflation in some of our key markets are the main drivers. Having travelled recently to multiple of our operations, I see that our clients are struggling with rising food and fuel prices.”
“Despite these challenges, we see growth in OLP on a constant currency basis and portfolio quality improvement in some of our major markets such as Pakistan, Philippines, Tanzania and Ghana. Additionally, we have made substantial strides with the implementation of our digital strategy with the imminent rollout of our core banking system in Pakistan.”
“However, global market volatility, FX movements and demonetization events in Nigeria have significantly impacted the Group OLP and portfolio quality. This, and incidental taxes in Pakistan have reduced financial performance in USD terms more than expected, resulting in lower growth and profitability compared to H1 2022.”