REG - ASA Intnl. Grp PLC - May 2023 Trading and Business Update

ASA InternationalAnnouncement

21/06/2023 15:15

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RNS Number : 4887D  ASA International Group PLC  21 June 2023

 

ASA International Group plc May 2023 trading and business update

 

Amsterdam, The Netherlands, 21 June 2023 - ASA International, ('ASA
International', the 'Company' or the 'Group'), one of the world's largest
international microfinance institutions, today provides the following update
on its business operations as of 31 May 2023.

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated by the Market Abuse Regulation
(EU) No.596/2014, as it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement, this
inside information is now considered to be in the public domain.

Business review YTD 2023 and revised Outlook

Whilst inflation and related FX movement are affecting the Group, we do see
that our operating environment for clients has improved and is expected to
continue to do so.

However, our profitability growth expectations are not materialising as
expected and as such, we do not expect profits to grow in 2023 compared to
levels seen in 2022 due to the following factors:

-       Impact on operations in Nigeria following recent elections and
demonetization taking longer than expected, alongside a steep rise in fuel
costs;

-       Devaluation of operating currencies against USD year-to-date has
been higher than expected in Pakistan, Ghana, Kenya and Nigeria; and

-       Slower recovery of overdue and written off loans in India than
expected.

 

May 2023 Business update highlights

·    The Group's Gross OLP increased to USD 346 million (3% higher than in
March 2023 and 16% lower than in May 2022), primarily due to increased
disbursements in Ghana and Nigeria.

·    All operating subsidiaries except India and Nigeria, achieved
collection efficiency of more than 90% with 11 countries achieving more than
95%.

·    The lower collection efficiency in Nigeria was largely due to
continuing impact of cash shortages following the Central Bank voiding old
banknotes as legal tender, as well as the challenging operating environment
during the elections.

·    India collections remained stable at 86% in May 2023 compared to March
2023. Collection efficiency, including regular and overdue collections as well
as advance payments, as a percentage of the regular, realisable collections,
including advance payments, decreased from 109% in March 2023 to 101% in May
2023.

·    PAR>30 for the Group, including off-book loans and excluding loans
overdue more than 365 days, decreased to 4.2% in May 2023 from 4.5% in March
2023, primarily due to write-offs of overdue loans in India.

·    The PAR>30 for the Group's operating subsidiaries, excluding India
and Myanmar, increased to 2.8% in May 2023 from 2.6% in March 2023.

·    Excluding all loans which have been overdue for more than 180 days
and, as a result, have been fully provided for, PAR>30 improved to 2.5% in
May 2023 from 2.6% in March 2023.

·    Disbursements as a percentage of collections exceeded 100% in 10
countries. The lower percentage in India was due to cash retention in order to
service debt obligations, while Sri Lanka was on account of carefully managing
disbursement by reviewing clients' repayment capability due to economic
challenges in the country.

 

Collection efficiency until 31 May 2023((1))

 Countries        Dec/22  Jan/23  Feb/23  Mar/23  Apr/23  May/23
 Pakistan         99%     99%     99%     99%     99%     100%
 India (total)    87%     83%     84%     86%     88%     86%
 Sri Lanka        93%     93%     94%     95%     95%     96%
 The Philippines  99%     99%     99%     99%     99%     99%
 Myanmar          97%     97%     98%     100%    99%     100%
 Ghana            100%    100%    100%    100%    100%    100%
 Nigeria          94%     94%     84%     78%     77%     84%
 Sierra Leone     93%     93%     94%     95%     96%     96%
 Tanzania         100%    100%    100%    100%    99%     99%
 Kenya            100%    100%    100%    100%    100%    100%
 Uganda           99%     99%     99%     100%    100%    99%
 Rwanda           97%     97%     96%     96%     96%     96%
 Zambia           97%     97%     97%     98%     98%     98%
 ((1)) Collection efficiency refers to actual collections from clients divided
 by realisable collections for the period. It is calculated as follows: the sum
 of actual regular collections, actual overdue collections and actual advance
 payments divided by the sum of realisable regular collections, actual overdue
 collections

 and actual advance payments. Under this definition collection efficiency
 cannot exceed 100%.

·    Collection efficiency remained broadly stable in most of our operating
countries compared to March 2023.

·    Adjusted collection efficiency in India, including regular and overdue
collections as well as advance payments, as a percentage of the regular,
realisable collections, including advance payments decreased from 109% in
March 2023 to 101% in May 2023. The substantial difference of this adjusted
collection efficiency metric is related to the Group's policy that any loan
instalment paid is first credited against the oldest outstanding amount
overdue. This has an adverse impact on India's monthly collection efficiency,
which is further aggravated by the relatively long duration of the loans
disbursed in India. This adjusted collection efficiency metric illustrates
that most clients in India continue to make payments on their loans due.

·    Although market conditions in both Myanmar and Sri Lanka remained
challenging, collection efficiency marginally improved in both markets.

·    The lower collection efficiency in Nigeria was largely due to
continuing impact of cash shortages following the Central Bank's decision to
no longer accept old banknotes as legal tender as of 10 February 2023, as well
as the challenging operating environment during the elections. Nigeria's
Supreme Court on 3 March 2023, ordered the Central Bank of Nigeria to extend
the use of these old banknotes until 31 December 2023.

 

 

Loan portfolio quality up to and including May 2023((2, 3, 4))

                 Gross OLP (in USDm)                                           Non-overdue loans              PAR>30 less PAR>180
                Mar-23            Apr-23                 May-23               Mar-23   Apr-23   May-23       Mar-23      Apr-23      May-23
 Pakistan               64                   64          66                   99.2%    99.3%    99.5%        0.5%        0.4%        0.3%
 India (total)          44                   43          45                   68.3%    69.4%    67.8%        6.4%        5.0%        5.3%
 Sri Lanka                5                    4         5                    89.2%    88.4%    85.2%        3.7%        3.6%        5.1%
 Philippines            52                   52          51                   97.4%    97.4%    97.2%        1.2%        1.2%        1.2%
 Myanmar                18                   17          18                   88.0%    88.1%    89.1%        1.3%        1.1%        0.8%
 Ghana                  35                   36          39                   99.3%    99.3%    99.7%        0.1%        0.1%        0.1%
 Nigeria                24                   25          27                   59.5%    64.2%    72.8%        15.7%       19.2%       16.3%
 Sierra Leone             4                    4         4                    84.6%    84.7%    84.8%        6.5%        5.3%        4.6%
 Tanzania               53                   54          55                   99.1%    99.1%    99.0%        0.4%        0.4%        0.5%
 Kenya                  18                   18          17                   99.1%    99.1%    99.1%        0.2%        0.3%        0.3%
 Uganda                 11                   11          12                   99.2%    98.9%    98.7%        0.4%        0.4%        0.4%
 Rwanda                   4                    4         4                    92.0%    91.4%    91.5%        4.0%        4.2%        4.2%
 Zambia                   3                    3         3                    93.0%    93.3%    93.5%        2.6%        2.4%        2.1%
 Group                335                  338                   346          90.9%    91.5%    91.8%        2.6%        2.7%        2.5%

 

                 PAR>30                              PAR>90                              PAR>180
                Mar-23   Apr-23   May-23            Mar-23   Apr-23   May-23            Mar-23   Apr-23   May-23
 Pakistan       0.6%     0.5%     0.4%              0.4%     0.3%     0.3%              0.1%     0.1%     0.1%
 India (total)  15.8%    14.7%    12.7%             14.5%    13.4%    9.9%              9.4%     9.7%     7.4%
 Sri Lanka      6.8%     6.8%     8.2%              5.0%     5.0%     5.7%              3.1%     3.2%     3.2%
 Philippines    1.7%     1.7%     1.8%              1.1%     1.3%     1.3%              0.6%     0.6%     0.6%
 Myanmar        6.7%     4.9%     3.3%              6.5%     4.8%     3.2%              5.4%     3.8%     2.5%
 Ghana          0.2%     0.2%     0.2%              0.1%     0.1%     0.1%              0.1%     0.1%     0.1%
 Nigeria        16.5%    20.1%    18.6%             4.9%     5.8%     8.4%              0.8%     1.0%     2.3%
 Sierra Leone   11.7%    11.2%    10.9%             9.6%     9.9%     9.7%              5.2%     5.9%     6.3%
 Tanzania       0.6%     0.6%     0.6%              0.3%     0.3%     0.4%              0.2%     0.2%     0.2%
 Kenya          0.6%     0.6%     0.7%              0.5%     0.5%     0.5%              0.3%     0.3%     0.4%
 Uganda         0.6%     0.6%     0.7%              0.4%     0.4%     0.5%              0.2%     0.2%     0.3%
 Rwanda         6.3%     6.6%     6.6%              4.1%     4.5%     4.7%              2.2%     2.3%     2.4%
 Zambia         5.1%     4.9%     4.4%              4.0%     3.8%     3.5%              2.6%     2.5%     2.3%
 Group          4.5%     4.5%     4.2%              3.2%     3.0%     2.8%              1.9%     1.8%     1.6%
 ( )

 ((2))  Gross OLP includes the off-book BC and DA model.

 ((3))  PAR>x is the percentage of outstanding customer loans with at least
 one instalment payment overdue x days, excluding loans more than 365 days
 overdue, to Gross OLP including off-book loans. Loans overdue more than 365
 days now comprise 3.0% of the Gross OLP.

 ((4))  The table "PAR>30 less PAR>180" shows the percentage of
 outstanding client loans with a PAR greater than 30 days, less those loans
 which have been fully provided for.

·    Gross OLP in India increased to USD 45 million (3% higher than in
March 2023 and 51% lower than in May 2022).

·    PAR>30 for the Group improved from 4.5% in March 2023 to 4.2% in
May 2023, primarily due to write-offs of overdue loans in India.

·    Credit exposure of the India off-book IDFC portfolio of USD 15.7
million is capped at 5%. The included off-book DA portfolio of USD 1.1 million
has no credit exposure.

Disbursements vs collections of loans until 31 May 2023((5))

 Countries        Dec/22  Jan/23  Feb/23  Mar/23  Apr/23  May/23
 Pakistan         86%     101%    101%    107%    108%    115%
 India (total)    26%     52%     72%     87%     77%     61%
 Sri Lanka        89%     81%     104%    120%    46%     88%
 The Philippines  106%    100%    104%    104%    107%    98%
 Myanmar          87%     124%    126%    91%     80%     115%
 Ghana            131%    89%     99%     104%    117%    110%
 Nigeria          82%     50%     34%     58%     110%    126%
 Sierra Leone     94%     67%     105%    118%    119%    110%
 Tanzania         125%    104%    103%    106%    118%    110%
 Kenya            41%     121%    112%    109%    107%    106%
 Uganda           93%     89%     107%    101%    100%    103%
 Rwanda           104%    78%     85%     93%     100%    115%
 Zambia           95%     102%    118%    115%    132%    115%
 ((5)) Disbursements vs collections refers to actual loan disbursements made to
 clients divided by total amounts collected from clients in the period.

·    Disbursements as a percentage of collections exceeded 100% in 10
countries. The lower percentage in India was due to cash retention in order to
service debt obligations, while Sri Lanka was on account of carefully managing
disbursement by reviewing clients' repayment capability due to economic
challenges in the country.

 

Development of Clients and Outstanding Loan Portfolio until 31 May 2023

                   Clients (in thousands)           Delta                         Gross OLP (in USDm)           Delta
 Countries        May/22     Apr/23     May/23     May/22-May/23  Apr/23-May/23  May/22    Apr/23    May/23    May/22-May/23 USD  May/22-May/23 CC((6))  Apr/23-

May/23 USD
 Pakistan         561        601        605        8%             1%             80        64        66        -18%               17%                    2%
 India (total)    442        211        235        -47%           11%            93        43        45        -51%               -48%                   5%
 Sri Lanka        49         45         45         -8%            2%             4         4         5         23%                -1%                    17%
 The Philippines  306        328        330        8%             1%             48        52        51        6%                 13%                    -2%
 Myanmar          109        97         98         -10%           2%             20        17        18        -10%               2%                     2%
 Ghana            163        180        181        11%            0%             43        36        39        -9%                31%                    8%
 Nigeria          233        170        164        -29%           -3%            40        25        27        -33%               -26%                   7%
 Sierra Leone     41         35         35         -14%           0%             6         4         4         -34%               14%                    -9%
 Tanzania         199        223        225        13%            1%             42        54        55        33%                35%                    2%
 Kenya            131        163        170        30%            5%             20        18        17        -16%               0%                     -7%
 Uganda           100        104        108        8%             4%             11        11        12        5%                 5%                     0.3%
 Rwanda           18         20         19         8%             -1%            4         4         4         7%                 18%                    4%
 Zambia           18         22         22         28%            2%             2         3         3         32%                49%                    -6%
 Total            2,370      2,197      2,239      -6%            2%             413       338       346       -16%               -0.8%                  2%

( )

((6)) Constant currency ('CC') implies conversion of local currency results to
USD with the exchange rate from the beginning of the period.

·    The Group's Gross OLP slightly increased to USD 346 million (3% higher
than in March 2023 and 16% lower than in May 2022), primarily due to increased
disbursements in Ghana and Nigeria.

Key events in May and June 2023

In India, a memorandum of understanding was signed by Microfinance
Institutions with Assam Government, whereby regular/defaulting clients will be
provided incentive/relief by The Government of Assam in categories I to III.
The Assam Government has since honoured its commitment to reimburse
clients/Microfinance entities for Category I and Category II payments. In a
recent communication, the Assam Government has clarified that they would be
settling the overdues of Category III customers with payments made directly to
the associated MFIs by March 2024 not exceeding the OLP balance of ASA India
of approximately USD 4.2 million.

---

 

 

The person responsible for the release of this announcement on behalf of the
Company for the purposes of MAR is Tanwir Rahman, CFO.

 

Enquiries:

ASA International Group plc

Investor Relations
 

Mischa Assink
 
ir@asa-international.com (mailto:@asa-international.com)

 

About ASA International Group plc

ASA International Group plc (ASAI: LN) is one of the world's largest
international microfinance institutions, with a strong commitment to financial
inclusion and socioeconomic progress. The company provides small, socially
responsible loans to low-income, financially underserved entrepreneurs,
predominantly women, across South Asia, South East Asia, West and East Africa.

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