GuruFocus -
- Outstanding Loan Portfolio (OLP): $385 million
- PAR30: 2.3%
- Number of Branches: 2,091
- Number of Clients: 2.4 million
- Gross OLP Growth: +14% year-on-year
- Profit Before Tax: $13.5 million (more than tripled from $3.7 million in H1 2023)
- Net Profit: $13.5 million (267% increase from H1 2023)
- Cost-to-Income Ratio: Decreased from 77% to 62%
- Total Assets: Surpassed $500 million
- Equity: Increased from $76.6 million to $81.1 million
- Return on Average Assets: 5.5%
- Gross Yield: Increased to 42.1%
- Net Interest Margin (NIM): Increased to 33.3%
- Net Interest Income: $75.1 million (24% increase from H1 2023)
- Effective Tax Rate: Decreased from 73% to 52%
- Operating Expenses: 4% increase year-on-year
- Total Funding: $443.4 million as of June 2024
- Cash at Bank and Hand: $95.3 million
- Hyperinflation Accounting Impact: $3.5 million hit on P&L
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ASA International Group PLC (LSE:ASAI) reported a significant increase in net profit, rising from $3.7 million in H1 2023 to $13.5 million in H1 2024, marking a 267% increase.
- The company saw a 14% year-on-year growth in its outstanding loan portfolio (OLP), reaching $385 million.
- The number of clients grew to 2.4 million, with East Africa contributing a 22% increase in client numbers.
- ASA International Group PLC (LSE:ASAI) successfully implemented a core banking system in Pakistan, migrating 600,000 clients.
- The company's asset volume surpassed $500 million, reaching pre-COVID levels.
- Hyperinflation accounting resulted in a $3.5 million hit to the company's financials for H1 2024.
- There were breaches in financial covenants amounting to $37.4 million, although waivers were received for $12.2 million.
- The effective tax rate remains high at 52%, partly due to deferred tax asset treatment issues in India and pending transfer pricing arrangements in key countries.
- Operating expenses increased by 4%, including a $3.5 million hyperinflation hit.
- India saw a significant increase in past-due loans, although its impact on the overall portfolio is now minimal.
A: For 2025, we would like to continue our strong growth on both operational and financial performance, driven by demand from clients for loans. Strong contributors include Pakistan, Philippines, Ghana, Kenya, and Tanzania. East Africa is particularly promising due to stable market circumstances, good smartphone penetration, and healthy client growth. (Karin Kersten, CEO)
Q: My second question is on the hyperinflationary accounting. I understand that Nigeria and Pakistan are on your watchlist, but are you able to provide any guidance on the possible impact if they hit the definition of hyperinflationary accounting?
A: For half year 2024, Ghana and Sierra Leone are included, resulting in a $3.5 million hit. An equal amount is expected for the next half of the year. Nigeria and Pakistan are being monitored, and the exact impact will be determined as of December 31, 2024. (Tanwir Rahman, CFO)
Q: My final question is just on India. I noticed that there was a significant increase in past-due loans. I was just wondering if there was a specific driver of this.
A: Three years ago, India was our largest country in terms of OLP. Today, our own on-book portfolio in India is $2.9 million out of $385 million, making it immaterial to the group's overall performance in terms of PAR. (Karin Kersten, CEO)
Q: What is the broad cost outlook for the second half of 2024?
A: The outlook for cost would be stable. No big change expected there. (Tanwir Rahman, CFO)
Q: Since you've mentioned East Africa as a strong region for ASA, maybe looking forward to the medium term, what are the initiatives to drive further growth there?
A: We plan to implement the core banking system in Tanzania and Kenya, onboarding 500,000 clients. We also aim to offer digital financial services, recruit new leadership, and acquire the necessary licenses for payments and savings. (Karin Kersten, CEO)
Q: Does the introduction of new digital products increase the risk profile for the group?
A: The digital channel is an enrichment on top of our current face-to-face model. We do not foresee a higher risk profile by adding digital; it will ease loan installment payments for clients at a distance. (Karin Kersten, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.