REG - ASA Intnl. Grp PLC - October 2023 Trading and Business Update
15/11/2023 07:00
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RNS Number : 4548T ASA International Group PLC 15 November 2023
Press release
ASA International Group plc October 2023 Trading and Business update
Trading in-line with the Group's expectation
Amsterdam, The Netherlands, 15 November 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 October 2023. The Company has seen a
continued improvement in the operating environment and business performance in
the last quarter, however, in line with previous guidance, the expected net
profit for the full year will be lower compared to 2022.
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.
October 2023 Trading update highlights
· We have seen a continued improvement in the operating environment and
business performance of our operating entities since June 2023. This is in
line with the guidance we provided alongside the 2023 interim results.
· ASA Pakistan was granted approval for "Commencement of Microfinance
Banking Business" on 13 November 2023. The mobilization of deposits is
dependent upon the successful implementation of its core banking system, which
is nearing completion.
· The unrestricted cash and cash equivalents position of the Group
remained at a healthy level of USD 41 million as at 31 October 2023, compared
to USD 45 million at 30 June 2023.
· PAR>30 for the Group's operating subsidiaries, excluding off-book
portfolio, improved to 2.2% at the end of October 2023 from 3.8% at the end of
June 2023, primarily due to write-offs of long overdue loans in India.
PAR>30 remains excellent below 1% in our major operations in Pakistan,
Ghana, and Tanzania.
· The Company continued to have a strong funding pipeline of USD 182
million fresh loans as per end of October 2023 (30 June 2023: USD 181
million), with over 97% having agreed terms. These can be accessed in the
short to medium term. The total amount of new debt raised in the year-to-date
31 October 2023 amounted to USD 130 million.
· The currencies in our major operating markets have been relatively
stable vis-a-vis the USD when comparing 31 October 2023 with 30 June 2023.
· ASA India received the first tranche of USD 1.5 million equivalent
from the government of Assam as part of the Category III payments and further
payments are expected in the coming months.
· The Company is actively pursuing deposit taking licenses in Kenya and
Tanzania with an application for a microfinance bank license expected to be
submitted before the end of this year.
October 2023 Business update highlights
· The Group's Gross OLP increased to USD 362 million (3% higher than at
31 August 2023 and 1% higher than at 31 October 2022), primarily due to growth
in Pakistan and Tanzania, with all other entities showing growth with the
exception of India.
· All operating subsidiaries achieved collection efficiency of 95% or
more, with 10 countries achieving 97% or more.
· Collection efficiency in India improved to 95% in October 2023
compared to 85% in August 2023. We continue to decrease our own portfolio
while increasing the BC portfolio in India, which helps to retain good
clients.
· PAR>30 for the Group, including off-book loans and excluding loans
overdue more than 365 days, improved to 2.1% at 31 October 2023 from 3.2% at
31 August 2023, primarily due to write-offs of long overdue loans in India.
· 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 1.2% at
31 October 2023 from 1.6% at 31 August 2023.
· Disbursements as a percentage of collections exceeded 100% in 11
countries. The decreased percentage in India was due to the strategic decision
to retain cash for upcoming debt repayments.
Funding
The cash and cash equivalents position of the Group remained at a healthy
level of USD 41 million as at 31 October 2023 (USD 45 million at 30 June
2023). The Company continues to have a strong funding pipeline of USD 182
million fresh loans as per 31 October 2023 (30 June 2023: USD 181 million),
with over 97% having agreed terms and can be accessed in the short to medium
term.
The total amount of new debt raised in the year-to-date 31 October 2023
amounts to USD 130 million. The Group also closed a Holding financing facility
with the United States International Development Finance Corporation ('DFC')
for USD 15 million on 26 September 2023. When fully drawn, this would bring
Holding net debt to around USD 53 million, which is at a stable level compared
to pre-covid net debt of USD 53 million at the end of 2019. The Company
remains confident of continued access to funding, while focusing on reducing
the proportion of debt funding sourced at the Holding level over time. This
will be achieved by (i) our operating subsidiaries attracting more debt from
local and international lenders, and (ii) increasing remittances from our
subsidiaries to the Holdings which have recently improved, as well as
accelerating our deposit taking capabilities over time.
The Company and its operating subsidiaries remain well capitalised and are
meeting local regulatory requirements.
Implementation of Core Banking System and Digital Strategy
The implementation of the digital strategy remains on track with the go live
of the core banking system in Pakistan planned in the coming weeks. The roll
out of the core banking system combined with the implementation of the digital
app in Ghana is planned for the first half of next year.
The implementation of the latest technology that is secure and stable is
expected to drive operational growth and efficiency as well as providing the
platform for a broader, more sophisticated product offering in the near
future, while complying with regulatory demands.
Key events October and November 2023
· The Group Holdings signed a loan facility agreement for USD 15
million with the United States International Development Finance Corporation
on 26 September 2023. The term of the loan is five years with the first
drawdown of USD 10 million received on 10 November 2023.
· ASA India received the first tranche of USD 1.5 million equivalent
from the Assam government as part of Category III payments honouring the MoU
signed with MFIs to settle outstanding overdues and defaults of microfinance
clients by directly reimbursing MFIs. The expected balance by ASA India for
this category of payments is approximately USD 5.0 million. Additional
tranches are expected in the coming months, with the second tranche currently
being processed for submission to the Assam government.
· On 13 November 2023 the State Bank of Pakistan ("SBP") allowed ASA
Microfinance Bank (Pakistan) Limited ("ASA Pakistan") the "Commencement of
Microfinance Banking Business". ASA Pakistan shall continue performing lending
operations. It will commence deposit mobilization upon the SBP having given
permission thereto, which is dependent upon the successful implementation of
its core banking system (T24 by Temenos) and compliance with certain
conditions set by the SBP.
Collection efficiency until 31 October 2023((1))
Countries May/23 Jun/23 Jul/23 Aug/23 Sep/23 Oct/23
Pakistan 100% 100% 100% 100% 100% 100%
India (total) 86% 85% 87% 85% 93% 95%
Sri Lanka 96% 96% 96% 96% 96% 95%
The Philippines 99% 99% 99% 99% 98% 98%
Myanmar 100% 100% 100% 100% 100% 100%
Ghana 100% 100% 100% 100% 100% 100%
Nigeria 84% 87% 92% 95% 95% 95%
Sierra Leone 96% 96% 97% 98% 98% 98%
Tanzania 99% 99% 99% 99% 100% 100%
Kenya 100% 100% 100% 100% 100% 100%
Uganda 99% 99% 99% 100% 100% 100%
Rwanda 96% 96% 97% 97% 97% 97%
Zambia 98% 99% 99% 99% 99% 99%
((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 stable at very high levels in most of
our operating countries compared to August 2023.
· India collections improved to 95% in October 2023 compared to 85% in
August 2023, due to further growth of our BC loan book.
· Although market conditions in Myanmar and Nigeria remained
challenging, collection efficiency remained stable in both markets.
Loan portfolio quality up to and including October 2023((2, 3, 4))
Gross OLP (in USDm) Non-overdue loans PAR>30 less PAR>180
Aug/23 Sep/23 Oct/23 Aug/23 Sep/23 Oct/23 Aug/23 Sep/23 Oct/23
Pakistan 65 69 70 99.6% 99.6% 99.6% 0.2% 0.2% 0.2%
India (total) 50 49 44 70.0% 69.8% 77.2% 4.5% 4.5% 3.2%
Sri Lanka 4 4 4 88.9% 88.9% 86.8% 2.9% 2.7% 2.7%
Philippines 51 52 52 95.7% 95.4% 95.1% 1.3% 1.5% 1.8%
Myanmar 19 20 21 91.7% 92.2% 92.6% 0.0% 0.0% 0.0%
Ghana 45 46 46 99.4% 99.4% 99.7% 0.1% 0.1% 0.1%
Nigeria 18 18 18 79.4% 80.7% 81.9% 9.1% 7.0% 5.1%
Sierra Leone 5 5 5 86.8% 87.5% 88.5% 2.0% 1.8% 1.6%
Tanzania 57 59 61 98.9% 98.9% 98.8% 0.5% 0.5% 0.5%
Kenya 20 21 21 99.3% 99.3% 99.3% 0.2% 0.2% 0.2%
Uganda 12 12 12 98.9% 98.9% 99.0% 0.5% 0.6% 0.4%
Rwanda 4 4 4 91.5% 91.3% 91.5% 4.0% 3.6% 3.9%
Zambia 3 3 3 94.1% 94.1% 94.4% 1.5% 1.3% 1.1%
Group 352 361 362 92.8% 93.0% 94.4% 1.6% 1.4% 1.2%
PAR>30 PAR>90 PAR>180
Aug/23 Sep/23 Oct/23 Aug/23 Sep/23 Oct/23 Aug/23 Sep/23 Oct/23
Pakistan 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.1% 0.0% 0.0%
India (total) 12.1% 11.6% 3.9% 10.3% 9.8% 2.0% 7.5% 7.1% 0.7%
Sri Lanka 5.8% 5.3% 4.8% 4.1% 3.7% 3.3% 2.9% 2.6% 2.2%
Philippines 2.3% 2.6% 3.0% 1.6% 1.7% 1.9% 1.0% 1.1% 1.2%
Myanmar 0.3% 0.2% 0.1% 0.3% 0.2% 0.1% 0.3% 0.2% 0.1%
Ghana 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0%
Nigeria 12.4% 13.3% 14.2% 10.2% 11.0% 11.9% 3.2% 6.3% 9.1%
Sierra Leone 8.0% 6.7% 4.9% 7.1% 5.9% 4.3% 5.9% 4.9% 3.3%
Tanzania 0.8% 0.8% 0.8% 0.5% 0.5% 0.6% 0.2% 0.3% 0.3%
Kenya 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2%
Uganda 0.9% 0.9% 0.8% 0.7% 0.6% 0.6% 0.3% 0.3% 0.4%
Rwanda 7.4% 6.9% 7.5% 5.5% 5.3% 5.7% 3.4% 3.3% 3.7%
Zambia 4.1% 3.7% 3.3% 3.5% 3.2% 2.8% 2.6% 2.4% 2.2%
Group 3.2% 3.1% 2.1% 2.6% 2.5% 1.5% 1.6% 1.7% 0.9%
((2)) Gross OLP includes the off-book BC and DA model, and loans valued at
fair value through the P&L ("FVTPL").
((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 2.9% 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 decreased to USD 44 million (12% lower than at 31
August 2023 and 16% lower than at 31 October 2022) due to write-offs of long
overdue loans.
· PAR>30 for the Group improved from 3.2% at 31 August 2023 to 2.1%
at 31 October 2023, primarily due to write-offs of long overdue loans in
India.
· Credit exposure of the India off-book IDFC portfolio of USD 11.2
million is capped at 5%. The included off-book DA portfolio of USD 1.0 million
has no credit exposure.
Disbursements vs collections of loans until 31 October 2023((5))
Countries May/23 Jun/23 Jul/23 Aug/23 Sep/23 Oct/23
Pakistan 115% 109% 107% 118% 105% N/A((6))
India (total) 61% 141% 125% 130% 114% 64%
Sri Lanka 88% 84% 101% 94% 95% 109%
The Philippines 98% 101% 98% 104% 104% 103%
Myanmar 115% 103% 124% 120% 126% 124%
Ghana 110% 126% 115% 119% 118% 109%
Nigeria 126% 143% 109% 105% 94% 120%
Sierra Leone 110% 95% 134% 144% 127% 113%
Tanzania 110% 116% 104% 112% 113% 113%
Kenya 106% 107% 120% 118% 116% 113%
Uganda 103% 95% 98% 104% 110% 115%
Rwanda 115% 106% 98% 93% 120% 116%
Zambia 115% 103% 82% 101% 113% 124%
((5)) Disbursements vs collections refers to actual loan disbursements made to
clients divided by total amounts collected from clients in the period.
((6)) Disbursements vs collections for Pakistan was not yet available for
October 2023.
· Disbursements as a percentage of collections exceeded 100% in 11
countries. The decreased percentage in India was due to a strategic decision
to retain cash for upcoming debt repayments.
Development of Clients and Outstanding Loan Portfolio until 31 October 2023
Clients (in thousands) Delta Gross OLP (in USDm) Delta
Countries Oct/22 Sep/23 Oct/23 Oct/22-Oct/23 Sept/23-Oct/23 Oct/22 Sep/23 Oct/23 Oct/22-Oct/23 USD Oct/22-Oct/23 CC ((7)) Sept/23-
Oct/23 USD
Pakistan 605 616 611 1% -1% 81 69 70 -13% 10% 2%
India (total) 371 201 190 -49% -5% 52 49 44 -16% -15% -11%
Sri Lanka 47 44 44 -8% -2% 4 4 4 10% -2% 2%
The Philippines 327 332 333 2% 0% 46 52 52 12% 10% 0.4%
Myanmar 105 106 108 3% 2% 17 20 21 20% 20% 4%
Ghana 169 197 204 20% 4% 27 46 46 74% 48% -0.2%
Nigeria 241 176 187 -22% 6% 40 18 18 -55% -19% 3%
Sierra Leone 37 41 42 12% 2% 5 5 5 7% 42% 2%
Tanzania 211 236 240 14% 2% 47 59 61 30% 39% 4%
Kenya 140 195 201 44% 3% 21 21 21 4% 29% 3%
Uganda 108 111 115 7% 4% 11 12 12 12% 11% 4.5%
Rwanda 21 20 20 -3% 1% 4 4 4 -8% 6% 3%
Zambia 21 24 24 12% 2% 3 3 3 -4% 31% 1%
Total 2,403 2,298 2,319 -3% 1% 358 361 362 1% 11.7% 0.4%
( )
((7)) 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 by 3% to USD 362 million
compared to 31 August 2023 (1% higher than as at 31 October 2022), primarily
due to growth in Pakistan and Tanzania, with all other entities showing growth
with the exception of India.
---
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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