Nkemdilim Nwadialor Equity Research Analyst, Financials
Rahul Shah Head of Financials Equity Research
Ayodeji Dawodu Equity Research Analyst, Financials
September 10 2019
Lower funding costs should support margin stability over the medium term
Letshego reported H1 19 net attributable profit of BWP328mn, down 1% yoy, which is line with its trading statement forecast. Higher operating expenses, increased loan impairment charges and a higher effective tax rate (up by 2.2ppts to 39.6%) drove the decrease in profits.
Letshego has several key executive vacancies, including the CEO, COO, CFO and CRO roles. During its earnings call, it announced that the recruitment process for these roles has advanced considerably and should be concluded by Q4. Dumisani Ndebele serves as Interim CEO.
Update on board composition. The company also announced on the earnings call that four new Independent Non-Executive Directors (INEDs) will join the Board, subject to NBFIRA approval. The new INEDs (whose names were not revealed, due to regulatory constraints) are specialists in the fields of fintech, financial services and risk management.
Strategy update. The group remains committed to strengthening its risk management, increasing cost efficiencies, improving asset quality and reducing the effective tax rate in H2. Letshego has no appetite for new acquisitions and hinted at discontinuing services that are unprofitable.
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