Press Release
ASA International Group plc
announces 2023 Year-End Trading Update
H2 2023 performance ahead of
market expectation, with momentum continuing in early
2024
Amsterdam, 28 February 2024 - ASA
International Group plc, ('ASA International', the 'Company' or the
'Group'), one of the world's largest international microfinance
institutions, today releases a trading update for the fiscal year
ended 31 December 2023 ('the Period').
Key
highlights:
|
|
FY 2023
(UNAUDITED)
|
H1 2023
(UNAUDITED)
|
FY 2022
(AUDITED)
|
% Change
FY 2022 - FY 2023
|
% Change
FY 2022 - FY 2023
(constant currency)
|
% Change
H1 2023 -
FY 2023
|
|
|
|
|
|
|
|
|
|
Number of clients (m)
|
2.33
|
2.22
|
2.30
|
1%
|
|
5%
|
|
Number of branches
|
2,016
|
2,073
|
2,028
|
-1%
|
|
-3%
|
|
OLP
(1) (USD m)
|
369.1
|
334.4
|
351.2
|
5%
|
21%
|
10%
|
|
Gross OLP (USD m)
|
377.3
|
346.8
|
367.5
|
3%
|
18%
|
9%
|
|
Average Gross OLP per client
(USD)
|
162
|
156
|
160
|
1%
|
16%
|
4%
|
|
PAR > 30 days
(2)
|
2.1%
|
3.8%
|
5.9%
|
|
|
|
|
(1) Outstanding loan portfolio ('OLP') includes off-book Business
Correspondence ('BC') loans and Direct Assignment loans, and loans
valued at fair value through the P&L ("FVTPL"), excludes
interest receivable, unamortised loan processing fees, and deducts
ECL reserves from Gross OLP.
|
|
(2) PAR>30 is the percentage of on-book OLP that has one or
more instalment of repayment of principal past due for more than 30
days and less than 365 days, divided by the Gross OLP.
|
|
|
|
|
|
|
| |
·
As announced at the time of the Group's interim
results, the Company's pre-tax income and
net income for the year ended 31 December
2023 will be lower than for the year ended
31 December 2022. However, on the back of a much stronger
performance in H2 2023, the Company expects to report
pre-tax income and net income for 2023 that exceed current market consensus estimates* and
that overall year on year financial performance in 2024 will
continue to improve as compared to 2023.
·
Group operating results improved in H2 2023 with
OLP growing by 10% to USD 369.1 million from USD 334.4 million in
H1 2023, and the portfolio quality improved to 2.1% as of 31
December 2023 from 3.8% as of 30 June 2023. The 5% year over year
OLP growth in USD (21% in constant currency) was driven by improved
performances in Pakistan, the Philippines, Ghana, Tanzania, and
Kenya.
·
As reported in the H1 2023 interim results,
currency depreciation against USD in Pakistan, Ghana, Tanzania, and
Kenya tempered the USD performances in these markets (PKR down 24%,
GHS down 17%, TZS down 8%, and KES down 27% against USD in the
Period).
·
High portfolio quality has been maintained as a
result of improvements in the operating environments in the
respective markets. PAR>30 for the Group's operating
subsidiaries significantly improved from 5.9% as at 31 December
2022 to 2.1% as at 31 December 2023, due to the increase in
portfolio quality in India and Myanmar, combined with a growth in
OLP in US dollar terms in other major countries. Pakistan, Ghana,
and Kenya had an outstanding portfolio quality in the period, with
PAR>30 less than 0.5% as at 31 December 2023.
·
The unrestricted cash and cash equivalents
remained at a healthy level of approximately USD 48 million. The
Company maintains a significant funding pipeline of USD 152 million
of wholesale loans, with the majority supported by term sheets
and/or draft loan documentation.
·
The Group achieved a major milestone, by migrating
more than 600,000 clients in Pakistan from the incumbent loan
management system to the Temenos Transact
Core Banking System on 25 February
2024.
*
Market consensus as at 23 February 2024 is pre-tax income of USD
28.4 million and net income of USD 10.8 million.
Karin Kersten, Chief Executive Officer of ASA International
Group plc, commented:
"We are
pleased that the Group has returned to growth of its operations in
H2 2023, with the operating environment improving across most
markets when compared to the first half of the year. Demand has
picked up as our clients and staff continued to demonstrate their
resilience while operating in economic circumstances that have
remained challenging. This activity and resilience led to an
improved performance of our major operating countries, Pakistan,
the Philippines, Ghana, Kenya, and Tanzania, almost all of which recorded excellent portfolio quality, growth, and profitability. As previously
announced, against the backdrop of global market volatility, the
improved performance in our major operating markets was negated by
FX movements in these markets which has significantly impacted the
Group OLP and profitability in USD terms.
Global
market volatility, adverse FX movements, and demonetization in
Nigeria significantly impacted the Group OLP and portfolio quality
in H1 2023. As a result, and even though improved operating
performance in H2 2023 led to increased growth and profitability
compared to H1 2023, the Group expects
pre-tax income and net income for 2023 to be lower than what were
achieved in 2022; however, results for 2023 are expected to
exceed current market consensus
estimates.
We are excited to observe the
rollout of the new core banking system in Pakistan and Ghana this
year, in line with the implementation of our digital
strategy.
Whilst the impact of inflation and
the related FX movements will continue to dampen the Group's
financial performance in USD terms this year, given improved
operating developments in H2 2023, we are confident of being able
to deliver improved performance of our operations in
2024."
Impact of foreign exchange rates
As a USD reporting company with
operations in thirteen different emerging market countries,
currency movements can have a major effect on the Group's USD
financial performance and reporting.
During FY 2023, currency movements
of operating currencies in most of our Asian and African markets
depreciated significantly against the US dollar, particularly the
operating currencies in Pakistan, Nigeria, Ghana, Sierra Leone,
Kenya, Rwanda, and Zambia. A number of these countries are key
operating regions for the Group and therefore this negative FX
movement had a significant impact on the reported OLP, Gross
OLP/client, and profitability figures in USD terms. Overall, the
currency movements resulted in a decrease of total equity by
approximately USD 29.5 million for FY 2023.
The Company and its operating
subsidiaries remain well capitalised and continues to meet local
regulatory requirements in each of its operating
markets.
Funding
The unrestricted cash and cash
equivalents remained at a healthy level of approximately USD 48
million as of 31 December 2023. The Group managed to raise
approximately USD 179 million in new debt funding in 2023. Funding
costs across the Group stabilized in 2023 compared to 2022 as
benchmark rate increases in some markets were tempered by improved
pricing on funding from local sources. As at the end of 2023, the
Company had a funding pipeline of USD 152 million of wholesale
loans, the majority of which are supported by term sheets and/or
draft loan documentation. The terms and conditions of the remaining
loans are being negotiated with the lenders.
Digital strategy
The Group's digital strategy entails
the implementation of our core banking system and our digital
financial services platform ("DFS app"). Alongside the
digitalisation of client procedures, the Group will seek to make
further progress in enhancing employee processes. On 25 February
2024, we reached a major milestone, by migrating more than 600,000
clients in Pakistan from our incumbent loan system to the Temenos
Transact Core Banking System. This migration enables ASA Pakistan
to start taking deposits and to grow their client base in a highly
regulated environment. Also, it sets the stage for the rollout of
the new core banking system to our other markets and provides a
foundation for a broader, more sophisticated product offering in
the near future.
The roll out of the core banking
system combined with the implementation of the digital app in Ghana
is planned for this year. The Supplier
Market Place app is currently operating in Ghana, with initial
customers onboarded and placing their online orders. The service is
expected to be expanded following the rollout of the digital loan
and banking app.
Outlook
Whilst the inflation and related FX
movements will continue to impact
the Group's operating
subsidiaries' financial performance in USD
terms, based on the positive developments
in H2 2023, the Company expects the operating environment for its
clients to continue to improve in most markets in 2024. As a
result, the Company expects financial performance in 2024 to
continue to improve compared to 2023.
Regional
performance:
South Asia
|
|
FY 2023
(UNAUDITED)
|
H1 2023
(UNAUDITED)
|
FY 2022
(AUDITED)
|
% Change
FY 2022 - FY 2023
|
% Change
FY 2022 - FY 2023
(constant currency)
|
% Change
H1 2023 -
FY 2023
|
|
|
|
|
|
|
|
|
|
Number of clients (m)
|
0.84
|
0.86
|
0.94
|
-10%
|
|
-2%
|
|
Number of branches
|
589
|
661
|
670
|
-12%
|
|
-11%
|
|
OLP (USD m)
|
118.0
|
112.1
|
118.6
|
-0.5%
|
13%
|
5%
|
|
Gross OLP (USD m)
|
119.7
|
119.9
|
128.5
|
-7%
|
6%
|
-0.1%
|
|
Average Gross OLP per client
(USD)
|
142
|
139
|
137
|
4%
|
17%
|
2%
|
|
PAR > 30 days
|
1.8%
|
7.3%
|
11.1%
|
|
|
|
·
South Asia's operational results improved in H2
2023 compared to H1 2023, with OLP increasing by 5% from USD 112.1m
to USD 118.0m and PAR>30 improving from 7.3% to 1.8%, despite
the number of branches decreasing to 589 and the number of clients
decreasing to 0.8m.
·
ASA Pakistan continued to grow its business, with
the number of clients growing 2% from 606k to 615k, while the
number of branches remained stable at 345 by year-end 2023. OLP
decreased from USD 79.1m to USD 69.5m (up 9% on a constant currency
basis). Gross OLP/Client decreased from USD 131 to USD 113, down by
14% (up 6% on a constant currency basis). PAR>30 improved from
0.7% at year-end 2022 to 0.3% at year-end 2023.
·
ASA India continued to intentionally shrink its
on-book OLP as it focused on the recovery of overdue loans. Reduced
loan disbursements and significant write-offs led to on-book OLP
decreasing by 63% and PAR>30 improving from 49.0% at year-end
2022 to 16.4% by year-end 2023.
·
ASA India's number of clients reduced by 36% from
284k in 2022 to 183k in 2023 and the number of branches dropped by
31% to 180 by year-end 2023. However, with the focus on growing its
off-book portfolio, ASA India's off-book portfolio increased from
USD 21.5m to USD 38.9m, up 81% (up 82% on a constant currency
basis), and its on-book and off-book portfolio increased from USD
35.7m year-end 2022 to USD 44.2m by year-end 2023 (up 24% on a
constant currency basis).
·
Lak Jaya, the Group's operating subsidiary in Sri
Lanka, has seen its number of clients reduce by 4% from 45k to 43k
whilst its number of branches remained stable at 64 as at 31
December 2023. OLP increased from USD 3.8m to USD 4.4m (up 2% on a
constant currency basis). Gross OLP/Client increased from USD 89 to
USD 97 (down 3% on a constant currency basis). PAR>30 improved
to 5.0% by the end of 2023 from 8.5% at year-end 2022.
South East Asia
|
|
FY 2023
(UNAUDITED)
|
H1 2023
(UNAUDITED)
|
FY 2022
(AUDITED)
|
% Change
FY 2022 - FY 2023
|
% Change
FY 2022 - FY 2023
(constant currency)
|
% Change
H1 2023 -
FY 2023
|
|
|
|
|
|
|
|
|
|
|
Number of clients (m)
|
0.44
|
0.43
|
0.42
|
5%
|
|
3%
|
|
|
Number of branches
|
458
|
463
|
441
|
4%
|
|
-1%
|
|
|
OLP (USD m)
|
73.2
|
68.1
|
63.3
|
16%
|
15%
|
8%
|
|
|
Gross OLP (USD m)
|
77.0
|
70.1
|
67.0
|
15%
|
14%
|
10%
|
|
|
Average Gross OLP per client
(USD)
|
173
|
163
|
158
|
10%
|
9%
|
6%
|
|
|
PAR > 30 days
|
2.8%
|
1.7%
|
6.5%
|
|
|
|
|
·
South East Asia's OLP increased in H2 2023
compared to H1 2023 by 8% from USD 68.1m to USD 73.2m, with the
number of branches decreasing by 1% from 463 to 458 and PAR>30
increasing from 1.7% to 2.8%.
·
Pagasa Philippines' number of clients increased by
2% from 325k as at 31 December 2022 to 333k by year-end 2023 and
the number of branches increased by 25 to 370, with its loan
portfolio also increasing from USD 49.6m at year-end 2022 to USD
54.2m year-end 2023 (up 9% on a constant currency basis). PAR>30
deteriorated from 1.7% to 3.8%.
·
Despite the continued volatile market conditions,
ASA Myanmar has stabilized its collection efficiency to 100%. The
number of clients in Myanmar increased by 12% from 99k to 111k and
the number of branches reduced by 8 to 88 by year-end 2023, with
its loan portfolio increasing from USD 13.8m to USD 19.0m (up 38%
on a constant currency basis). PAR>30 significantly improved
from 20.4% to 0.2%.
·
In February 2024, the regime in Myanmar declared a
law governing mandatory military service would be enforced for men
aged 18 to 35 and women aged 18 to 27 for up to two years which
would begin in April 2024. Given the demographic of our clients in
this region, where approximately 24.0% of our clients fall into
these age groups, this rule is expected to have an impact on the
business in Myanmar. As at 31 December 2023, ASA Myanmar
represented approximately 5.2% of the Group total
OLP.
West Africa
|
|
FY 2023
(UNAUDITED)
|
H1 2023
(UNAUDITED)
|
FY 2022
(AUDITED)
|
% Change
FY 2022 - FY 2023
|
% Change
FY 2022 - FY 2023
(constant currency)
|
% Change
H1 2023 -
FY 2023
|
|
|
|
|
|
|
|
|
|
|
Number of clients (m)
|
0.43
|
0.38
|
0.43
|
-2%
|
|
12%
|
|
|
Number of branches
|
452
|
452
|
446
|
1%
|
|
0%
|
|
|
OLP (USD m)
|
72.4
|
60.3
|
82.4
|
-12%
|
19%
|
20%
|
|
|
Gross OLP (USD m)
|
74.6
|
62.9
|
84.9
|
-12%
|
21%
|
19%
|
|
|
Average Gross OLP per client
(USD)
|
176
|
166
|
196
|
-10%
|
23%
|
6%
|
|
|
PAR > 30 days
|
3.2%
|
5.2%
|
4.2%
|
|
|
|
|
·
West Africa's operational results significantly
improved in H2 2023, compared to H1 2023, with OLP increasing 20%
from USD 60.3m to USD 72.4m and PAR>30 improving from 5.2% to
3.2%.
·
ASA Savings & Loans, the Group's operating
subsidiary in Ghana, continued to grow with client numbers up by
14% from 177k to 201k and serviced from 143 branches, up by 6
compared to year-end 2022. OLP increased by 27% from USD 40.8m to
USD 51.9m (up 49% on a constant currency basis), and Gross
OLP/Client increased from USD 231 to USD 259, up by 12% (up 31% on
a constant currency basis). PAR>30 improved from 0.6% to
0.1%.
·
ASA Nigeria's client numbers reduced by 16% from
220k to 184k, serviced from 263 branches, remaining stable compared
to year-end 2022, and OLP was down from USD 37.3m at year-end 2022
to USD 15.9m at year-end 2023 (down only 15% on a constant currency
basis). Gross OLP/Client was down from USD 179 to USD 96 (up 8% on
a constant currency basis). PAR>30 deteriorated from 7.1% to
12.0%.
·
ASA Sierra Leone has increased the number of
clients by 7% from 37k to 39k, serviced from 46 branches by
year-end 2023. OLP increased from USD 4.3m to USD 4.6m (up 29% on a
constant currency basis) and Gross OLP/Client also slightly
decreased from USD 123 to USD 122 (up 21% on a constant currency
basis). PAR>30 significantly improved from 10.7% to
4.6%.
East Africa
|
|
FY 2023
(UNAUDITED)
|
H1 2023
(UNAUDITED)
|
FY 2022
(AUDITED)
|
% Change
FY 2022 - FY 2023
|
% Change
FY 2022 - FY 2023
(constant currency)
|
% Change
H1 2023 -
FY 2023
|
|
|
|
|
|
|
|
|
|
Number of clients (m)
|
0.62
|
0.56
|
0.51
|
22%
|
|
12%
|
|
Number of branches
|
517
|
497
|
471
|
10%
|
|
4%
|
|
OLP (USD m)
|
105.5
|
93.9
|
86.9
|
21%
|
36%
|
12%
|
|
Gross OLP (USD m)
|
106.0
|
94.0
|
87.3
|
21%
|
36%
|
13%
|
|
Average Gross OLP per client
(USD)
|
171
|
169
|
172
|
-1%
|
11%
|
1%
|
|
PAR > 30 days
|
1.1%
|
1.1%
|
0.9%
|
|
|
|
·
East Africa's operating results improved in H2
2023 compared to H1 2023 with OLP increasing 12% from USD 93.9m to
USD 105.5m and the number of branches increasing by 20 to
517.
·
ASA Tanzania expanded its operations with the
number of clients increasing by 14% from 217k to 248k, serviced
from 202 branches (an increase of 22 versus year-end 2022). OLP
rose from USD 51.2m to USD 64.7m (up 36% on
a constant currency basis) and Gross
OLP/Client increased from USD 237 to USD 263 (up 19% on a constant currency basis).
PAR>30 deteriorated from 0.4% to 0.9%.
·
ASA Kenya significantly expanded its operations as
the number of clients increased by 45% from 141k to 205k serviced
from 132 branches, up by 8. OLP increased from USD 16.9m to USD
20.9m (up 57% on a constant currency basis) and Gross OLP/Client
decreased from USD 120 to USD 101 (up 7% on a constant currency
basis). PAR>30 improved from 0.8% to 0.3%.
·
ASA Uganda's number of clients rose by 13% from
107k to 121k, serviced from 120 branches, up by 10. OLP increased
from USD 11.6m to USD 13.0m (up 15% on a
constant currency basis) and Gross OLP per
client decreased from USD 109 to USD 107 (up 0.1% on a constant currency basis). PAR>30 improved from 0.9% to 0.8% by year-end
2023.
·
ASA Rwanda's number of clients reduced by 2% from
21.2k to 20.8k, serviced from 32 branches, up by 2. OLP decreased
from USD 4.3m to USD 4.0m (up 11% on a constant currency basis) and
Gross OLP/Client decreased from USD 207 to USD 201 (up 15% on a
constant currency basis). PAR>30 deteriorated from 4.6% to
6.8%.
·
ASA Zambia significantly expanded its operations,
with its number of clients up by 19% from 21k to 25k, serviced from
31 branches, up by 4. OLP was stable at USD 2.9m (up 43% on a
constant currency basis) and Gross OLP/Client decreased from USD
139 to USD 119 (up 22% on a constant currency basis). PAR>30
improved from 5.0% in 2022 to 2.6% in 2023.
Notice of Full Year Results and AGM
The Company will announce its full
year audited results for the year ended 31 December 2023
on 23 April 2024. The
Company's Annual General Meeting will be held on 20 June
2024.
Please note that the financial
information provided in this Trading Update is still subject to
audit and, therefore, subject to change.
Enquiries:
ASA
International Group plc
Investor
Relations
Mischa Assink
ir@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.