REG - ASA Intnl. Grp PLC - Q4 2024 Trading and Business Update
21/01/2025 07:00
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RNS Number : 0274U ASA International Group PLC 21 January 2025
ASA International Group plc - Q4 2024 Trading and Business Update
ASA International Group plc (LSE: ASAI), one of the world's largest
international microfinance institutions, today provides a trading update
including a business operations update for the three-month period ended 31
December 2024.
Highlights
· On a preliminary unaudited basis, reported net profit for 2024 is
expected to be approximately USD 24m (2023: USD 8.8m). This was achieved
against the backdrop of the continued negative impact of the need for
hyperinflation accounting in Ghana and Sierra Leone in 2024.
· Momentum seen in the business through 2024 continued into Q4 2024
where ASA International delivered strong operational performance as the loan
book grew following increased demand from clients. Gross OLP increased by 9%
in the quarter to USD 458m as at 31 December 2024 (30 September 2024: USD
420m) and by 22% in the year (31 December 2023: USD 377m). This OLP growth was
predominantly driven by Pakistan, Ghana, Kenya, Tanzania and Uganda. Pakistan,
Ghana, Kenya, Tanzania and Uganda were also the key contributors to the 3%
growth in the overall client base to 2.5m at the end of the quarter versus Q3
2024.
· High portfolio quality was maintained alongside this OLP growth.
PAR>30 slightly improved to 2.2% as at 31 December 2024 (30 September 2024:
2.3%, 31 December 2023: 2.1%), primarily due to greater portfolio quality in
Nigeria, Rwanda, Sri Lanka. Outstanding portfolio quality was recorded in
Pakistan, Ghana, Kenya, Uganda and Myanmar with PAR>30 less than 0.5% as at
31 December 2024.
· Based on third-party sources, the current assessment for 2025 is that
only Sierre Leone will be subject to hyperinflationary accounting. Ghana,
which contributed the vast majority of the hyperinflation accounting impact on
the Group's accounts in 2023 and 2024, is currently forecasted not to be
considered hyperinflationary in 2025. Should this be the case, it would mean
that the overall impact of hyperinflation accounting on the Group's accounts
in 2025 is expected to be materially reduced.
· On 16 January 2025, ASA India informed the Reserve Bank of India of
its intention to surrender its microfinance licence. ASA India has been a
challenging market for the Group and having regard to the need to reduce costs
given the deteriorating financial profile, associated liquidity concerns,
ongoing lender defaults, and the contemplated move to a business
correspondence business rather than on-book lending, it was felt that the
decision to surrender of the microfinance licence was in the best interests of
the wider Group. Furthermore, this decision to surrender the microfinance
licence also aligns with the broader intention of ASA International to
ultimately divest ASA India.
· All banks in Pakistan, including ASA Pakistan, have received
notification from the State Bank of Pakistan of the need to prepare and submit
a plan for the conversion to Islamic banking from conventional banking.
· Digital strategy and transformation programme remains on track with
the rollout of the Core Banking System combined with the implementation of the
digital financial services app in Ghana and Tanzania planned for the second
half of 2025.
· ASA International resumed its dividend policy on 5 December 2024 with
the announcement of an interim dividend of USD 0.03 per share. The 2024 final
dividend will be announced alongside the FY24 results on 24 April 2024.
Rob Keijsers, Interim Chief Executive Officer, stated:
"ASA International saw strong operational growth throughout 2024 as demand for
our products from clients remained robust. Total number of clients surpassed
2.5m and OLP increased by 22% by the end of 2024 with Pakistan, Ghana,
Tanzania, Kenya and Uganda driving this growth. Our proven, low risk model
ensured that this loan growth was not achieved at the expense of portfolio
quality, with PAR>30 remaining low at 2.2% for the whole company at the end
of the year. This operational performance also translated into significantly
improved profitability with net profit almost trebling versus 2023. The
resumption of our dividend policy by the Board was also a particular highlight
as we return to a more normalised operating environment.
"2024 also saw the organisation welcoming onboard new local CEOs for Uganda,
Rwanda and Nigeria. They are already providing fresh perspectives to ASA
International alongside their significant professional, banking and leadership
experience.
"Looking forward to 2025, we expect to see growing demand for loans and ever
greater productivity across the organisation as we drive efficiency in the
branch network and therefore reduce our cost-income ratio. From a digital
transformation standpoint, we will build on the successes of 2024 by
continuing the roll-out of the core banking system and digital platform to
Tanzania and Ghana."
Preliminary 2024 Results
Building on the momentum seen in the first half 2024, ASA International
continued to deliver improved business performance in the second half of the
year with sustained high demand for loans from clients. As a result, on a
preliminary unaudited basis, reported net profit for 2024 is expected to be
approximately USD 24m, which is significantly higher than the USD 8.8m net
profit recorded in 2023. The results remain subject to the completion of the
Group's year-end audit process which will finalise certain adjustments
relating to ASA India, hyperinflation accounting and tax provisions. ASA
International believes that the consensus estimates of 2024 net profit on a
reported basis as at the date of this announcement is USD 20.8m.
Hyperinflation
The IFRS standard IAS 29 "Financial Reporting in Hyperinflationary Economies"
requires the adjustment of financials of those operating entities, which are
reporting in the currency of hyperinflationary economies with the main
indicator being three-year cumulative inflation exceeding 100% for the prior
three year period. The application of this accounting standard ensures that
all items are presented to reflect the current purchasing power at the
reporting date. As at the end of 2024, Ghana and Sierra Leone are both
considered to be hyperinflationary economies and this will be reflected in the
Group's full-year 2024 results.
As at the date of this announcement and based on available third-party
sources, the current assessment for 2025 is that only Sierre Leone will be
subject to hyperinflationary accounting. Ghana, which contributed the vast
majority of the hyperinflation accounting impact on the Group's financials in
2023 and 2024, is forecasted to not to be hyperinflationary in 2025. Should
Ghana ultimately not be deemed a hyperinflationary economy in 2025, the
overall impact of hyperinflation accounting in 2025 is expected to be
materially reduced compared to 2023 and 2024. Nigeria remains on the
watchlist, while Pakistan has been removed from the watchlist following
positive inflation developments in 2024.
Business Operations Update
Clients (in thousands) Delta Number of branches Delta
End of period Dec-23 Sep-24 Dec-24 Dec 23 - Dec 24 Sep 24 - Dec 24 Dec-23 Sep-24 Dec-24 Dec 23 - Dec 24 Sep 24 - Dec 24
Pakistan 616 631 662 8% 5% 345 369 380 10% 3%
India (total) 183 181 172 -6% -5% 180 176 175 -3% -1%
Sri Lanka 43 43 44 2% 4% 64 64 63 -2% -2%
South Asia 842 855 878 4% 3% 589 609 618 5% 1%
The Philippines 333 356 353 6% -1% 370 400 400 8% 0%
Myanmar 111 122 122 10% 0% 88 89 91 3% 2%
Southeast Asia 444 479 475 7% -1% 458 489 491 7% 0%
Ghana 201 212 223 11% 5% 143 152 153 7% 1%
Nigeria 184 155 150 -19% -3% 263 268 273 4% 2%
Sierra Leone 39 39 43 11% 12% 46 47 49 7% 4%
West Africa 425 405 416 -2% 3% 452 467 475 5% 2%
Tanzania 248 264 278 12% 5% 202 221 221 9% 0%
Kenya 205 256 262 28% 2% 132 145 145 10% 0%
Uganda 121 138 150 24% 9% 120 125 125 4% 0%
Rwanda 21 22 23 10% 3% 32 37 37 16% 0%
Zambia 25 29 29 15% -1% 31 39 39 26% 0%
East Africa 619 709 742 20% 5% 517 567 567 10% 0%
Group 2,330 2,447 2,511 8% 3% 2,016 2,132 2,151 7% 1%
· Total number of clients across all regions increased to 2.5m, 3%
higher than at the end of Q3 2024 and 5% higher than at 31 December 2023. This
growth was primarily driven by increased client numbers in Pakistan, Ghana,
Tanzania, Kenya and Uganda.
Gross OLP (in USDm) Delta PAR>30
End of period Dec 23- Dec 24 (USD) Dec 23- Dec 24 (CC) Sep 24- Dec 24 (USD)
Dec-23 Sep-24 Dec-24 Dec-23 Sep-24 Dec-24
Pakistan 70 83 90 29% 29% 9% 0.3% 0.5% 0.5%
India (total) 46 48 40 -12% -9% -15% 3.1% 4.6% 5.4%
Sri Lanka 4 5 5 29% 16% 10% 5.0% 5.4% 4.9%
South Asia 120 135 136 13% 14% 1% 1.7% 2.2% 2.1%
The Philippines 55 61 60 9% 14% -1% 3.8% 6.4% 6.8%
Myanmar 22 26 27 26% 26% 4% 0.2% 0.2% 0.3%
Southeast Asia 77 87 88 14% 18% 0% 2.8% 4.5% 4.8%
Ghana 52 53 67 30% 59% 27% 0.1% 0.2% 0.2%
Nigeria 18 9 12 -33% 16% 34% 12.1% 7.2% 4.9%
Sierra Leone 5 6 7 40% 39% 16% 4.6% 9.1% 9.4%
West Africa 75 68 86 16% 48% 27% 3.3% 1.9% 1.5%
Tanzania 65 69 85 31% 27% 24% 0.9% 1.4% 1.3%
Kenya 21 36 36 75% 44% 0% 0.3% 0.2% 0.3%
Uganda 13 16 19 44% 40% 16% 0.8% 0.2% 0.2%
Rwanda 4 5 5 26% 38% 16% 6.8% 6.3% 5.1%
Zambia 3 3 3 10% 18% -2% 2.6% 3.3% 3.4%
East Africa 106 129 149 41% 32% 15% 1.1% 1.1% 1.1%
Group 377 420 458 22% 26% 9% 2.1% 2.3% 2.2%
· Gross OLP increased to USD 458m - 9% higher than at the end of Q3
2024 and 22% higher than at 31 December 2023. This growth was predominantly
driven by Pakistan, Ghana, Nigeria, Tanzania and Uganda.
· Gross OLP in India decreased to USD 40m - on-book decreased from USD
3.2m to USD 2.5m at 31 December 2024 and off-book portfolio decreased from USD
44m to USD 38m at 31 December 2024. The on-book portfolio decreased as the
Group continues its strategy of shrinking its on-book portfolio. The decrease
in off-book portfolio was again primarily due to reduced activity levels from
BC partners. It is the intention of the Group to withdraw from the Indian
microfinance market.
· PAR>30 for the Group, including off-book loans and excluding loans
overdue for more than 365 days, slightly improved to 2.2% at the end of Q4
2024. This was primarily due to greater portfolio quality in Nigeria, Rwanda,
Sri Lanka. Outstanding portfolio quality was recorded in Pakistan, Ghana,
Kenya, Uganda and Myanmar with PAR>30 less than 0.5% as at 31 December
2024.
Notes
(1) Constant currency ('CC') implies conversion of local currency results to
USD with the exchange rate from the end of December 2023.
(2) PAR refers to 'Portfolio at Risk'. PAR>30 is the percentage of
outstanding customer loans with at least one instalment payment overdue 30
days, excluding loans more than 365 days overdue, to Gross OLP including
off-book loans. Loans overdue more than 365 days now comprise 0.6% of the
Gross OLP.
(3) 'ASA International', the 'Company', the 'Group' all refer to ASA
International Group plc and its subsidiaries.
(4) The Company has elected to cease the disclosure of metrics on a quarterly
basis in its Business Updates relating to 'collection efficiency' and
'disbursement vs collection of loans'. Given the normalisation of ASA
International's business and operations following the end of the COVID-19
pandemic, these metrics are deemed no longer relevant.
Contact Details
ASA International Group plc
Investor Relations
Jonathan Berger
ir@asa-international.com (mailto:ir@asa-international.com)
About ASA International Group plc
ASA International Group plc (LSE: ASAI) 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.
Disclaimer
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to purchase, otherwise acquire, issue, subscribe for, sell or otherwise
dispose of any securities, nor any solicitation of any offer to purchase,
otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any
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distributed should inform themselves about and observe such restriction.
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.
The person responsible for the release of this announcement on behalf of the
Company for the purposes of MAR is Tanwir Rahman, Chief Financial Officer.
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