TIDMASAI
RNS Number : 4144Q
ASA International Group PLC
26 February 2021
ASA International Group plc announces 2020 Year End Trading
Update
Amsterdam, 26 February 2021 - ASA International Group plc, ("ASA
International", the "Company" or the "Group"), one of the world's
largest international microfinance institutions, today releases its
trading update for the twelve-month period from 1 January 2020 to
31 December 2020.
Key highlights:
FY 2020 H1 2020 FY 2019 % Change % Change % Change
FY 2019 FY 2019 - H1 2020
- FY FY 2020 - FY
2020 2020
(UNAUDITED) (UNAUDITED) (AUDITED) (constant
currency)
Number of clients
(mn) 2.4 2.3 2.5 -6% 2%
Number of branches 1,961 1,956 1,895 3% 0%
OLP (1) (USD mn) 418.5 387.7 467.4 -10% -9% 8%
Gross OLP 446.5 411.7 471.3 -5% -4% 8%
Average OLP per client
(USD) 188 177 186 1% -3% 6%
PAR > 30 days (2) 13.1% 3.5% 1.5%
(1) Outstanding loan portfolio ("OLP") includes off-book
Business Correspondence ("BC") loans and Direct Assignment loans,
excludes interest receivable, unamortized loan processing fees, and
deducts modification losses and ECL provisions from Gross OLP; (2)
PAR>30 is the percentage of OLP that has one or more instalment
of repayment of principal past due for more than 30 days divided by
the total outstanding gross loan portfolio.
-- 2020 operating results are expected to be below the Company's
expectations given the challenging operating environment with
collection efficiency recovering at a slower pace than anticipated
in India and, as result, higher than expected credit losses with
PAR>30 in India having increased to 31.7% by year-end 2020.
-- The Philippines also struggled to increase collection
efficiency to satisfactory levels following the initial two months
lockdown and subsequent moratoriums granted to clients, which
resulted in substantial modification losses and relatively high
expected credit losses in 2020.
-- Despite ongoing COVID-19 related disruption since the end of
the lockdowns, the Group's other operating subsidiaries, where
traditionally more than two-thirds of our customary operating
profits are generated, generally have been more successful in
increasing collection efficiency into the high eighties or
nineties. As a result, the Group's operating subsidiaries,
excluding India, collectively have been able to maintain PAR>30
at 5.4%.
-- With the exception of Ghana, all major operating countries
reported lower operating results in 2020 than in 2019.
-- Despite the deduction of modification and expected credit
losses, OLP recovered to USD 419m from a low of USD 388m as at 30
June 2020, compared with USD 467m for FY 2019. Gross OLP reduced by
5% from USD 471m at the end of 2019 to USD 447m at the end of
2020.
-- By year-end 2020, modification losses on interest income and
receivables amounted to approximately USD 3.7m, which was
substantially less than the USD 13.3m as at 30 June 2020. As fewer
moratoriums are granted to clients, modification losses are
expected to reverse and, assuming no further long lockdowns or
moratoriums are imposed or granted, to further reduce.
-- Unrestricted cash and cash equivalents remained high at
approximately USD 101m at year-end 2020 with the majority of the
Company's USD 225m pipeline of future wholesale loans supported by
(agreed) term sheets and/or draft loan documentation.
Dirk Brouwer, Chief Executive Officer of ASA International Group
plc, commented:
"2020 has been one of the most challenging years for our company
with lockdowns, curfews and many other measures taken by
Governments to reduce the spread of COVID-19. We have been
fortunate that up until now none of our staff and few of our
clients' health have been badly affected by COVID-19. Nevertheless,
it has been difficult for many of our clients to run their
businesses and for our staff to service them.
In India and the Philippines, two of our larger markets in terms
of number of clients, COVID-19 has ultimately led to our clients
struggling to meet their financial obligations to our Company.
Besides the ongoing disruption in the market places where many of
our clients usually trade, political activism in the State of Assam
(India) against MFIs with the threat of local government
intervention as well as the long-term impact of cyclone Amphan,
adversely affected the repayment discipline and capacity of many of
our clients in this region. The situation in the Philippines has
been very challenging, although in January 2021 we saw improvement
in the collection of loan instalments, which has given us
confidence that the situation will gradually normalise during the
course of this year.
While the general expectation is that the situation will improve
over time, we nevertheless, consider it appropriate to
substantially increase the provision for expected credit losses
from USD 10.6m last June to approximately USD 24.4m now. India
accounted for USD 10.4m and the Philippines for USD 2.9m of the
aggregate USD 13.8m increase in the provision for expected credit
losses in the second half of 2020. The consequence of this is that
the USD 10m of expected net income of the Group for 2020 will now
be reduced to almost zero. This is disappointing, but in our
opinion appropriate in view of the current situation on the
ground.
We expect that the operating situation in many countries will
remain challenging in 2021. Nevertheless, a substantial improvement
of the operating environment with less disruption caused by
COVID-19 should lead to better operational and financial
performance during the course of 2021, albeit still below levels of
past performance in prior years. "
Notes:
Please note that the financial information provided in this
Trading Update is still subject to audit and therefore subject to
change.
Regional performance:
South Asia
FY 2020 H1 2020 FY 2019 % Change % Change % Change
FY 2019 FY 2019 - H1 2020
- FY FY 2020 - FY
2020 2020
(UNAUDITED) (UNAUDITED) (AUDITED) (constant
currency)
Number of clients
(mn) 1.2 1.2 1.2 -4% 0%
Number of branches 756 766 751 1% -1%
OLP (1) (USD mn) 220.6 225.5 254.4 -13% -11% -2%
Gross OLP 240.1 234.1 256.5 -6% -4% 3%
Average OLP per client
(USD) 203 197 208 -3% -2% 3%
-- ASAI India faced a number of challenges with its collection
efficiency being below optimal levels, caused by the threat of
government intervention and political activism in Assam, which may
lead to restrictions on some of the customary operating procedures
of MFIs, like collecting loan instalments at the client's doorstep
and even suggestions by some parties of possible loan waivers.
Collections in districts of West Bengal which are neighbouring
Assam, including Jalpaiguri and Cooch Behar, have also been
affected by the situation in Assam. Collections also remained
relatively weak in the southern districts of West Bengal, including
the Midnapore and the 24 Parganas, which were most severely
affected by cyclone Amphan that hit West Bengal in May 2020. With
no further moratoriums being offered to clients, PAR>30
increased from 1.5% at year-end 2019 to 31.7% by year-end 2020 in
India.
-- ASAI India's number of clients was down 3% from 732K in 2019
to 714K by year-end 2020 with its portfolio (own and BC) decreasing
from USD 182.0m year-end 2019 to USD 149.7m by year-end 2020. BC
portfolio in India decreased from USD 55.9m to USD 47.9mn, down 14%
(down 10% on constant currency basis). The reduction in portfolio
size was partially caused by the increase of the provision for
expected credit losses from USD 1.1m at year-end 2019 to about USD
14.5m at year-end 2020.
-- ASA Pakistan weathered the COVID-19 pandemic relatively well
with the number of clients down by 23K to 416K, down 5%, and number
of branches up by 11 to 292. OLP/Client increased from USD 143 to
USD 155, up by 8% (up 12% on a constant currency basis). PAR>30
is up from 2% year-end 2019 to 4% year-end 2020. ASA Pakistan
expects to complete its transformation into a microfinance bank
before the end of June 2021.
-- Lak Jaya, our operating subsidiary in Sri Lanka, has seen its
number of clients go down by 11% from 63K to 56K with its number of
branches down 5 to 66. OLP/Client increased slightly from USD 160
to USD 164. Despite a USD 500K write-off in June 2020 related to
the long-term overdue payment of loan instalments caused by the
Easter Sunday Bombings and political activism linked to a
Government instituted debt relief program, PAR>30 improved from
9.7% to 7.4% by year-end 2020.
South East Asia
FY 2020 H1 2020 FY 2019 % Change % Change % Change
FY 2019 FY 2019 - H1 2020
- FY FY 2020 - FY
2020 2020
(UNAUDITED) (UNAUDITED) (AUDITED) (constant
currency)
Number of clients
(mn) 0.4 0.4 0.5 -13% -5%
Number of branches 415 416 405 2% 0%
OLP (1) (USD mn) 74.7 68.8 84.2 -11% -18% 9%
Gross OLP 80.8 77.7 84.9 -5% -12% 4%
Average OLP per client
(USD) 189 173 173 9% -4% 9%
-- Pagasa Philippines' collection efficiency suffered due to the
lengthy lockdown in the Philippines as well as the subsequent
ongoing disruption of our clients' businesses with, amongst others,
substantial restrictions of public transport, closed market places,
and the closure of communities following increased infection rates.
This forced Pagasa to provide many clients with loan extensions
and/or successive moratoriums on the payment of loan instalments,
which triggered a USD 0.3m modification loss and a USD 4.1m
provision for expected credit losses in 2020.
-- Pagasa's number of clients was down 12% from 340K in 2019 to
299K by year-end 2020 with its loan portfolio decreasing from USD
52.7m year-end 2019 to USD 45.8m year-end 2020. PAR>30 increased
from 1.3% at year-end 2019 to 6.4% at year-end 2020.
-- ASA Myanmar performed well with collection efficiency in the
mid-nineties soon after the end of the relatively short lockdown in
Myanmar. However, the restriction on collections in Yangon and Bago
Region with no allowance to accrue interest for the months of
November and December 2020, where the majority of ASA Myanmar's
branches are based, had a major adverse effect on its operating
performance for the year 2020.
-- ASA Myanmar's number of clients was down 15% from 152K in
2019 to 129K by year-end 2020 with its loan portfolio decreasing
from USD 31.5m year-end 2019 to USD 28.9m year-end 2020. PAR>30
increased from 0.4% at year-end 2019 to 0.5% at year-end 2020.
West Africa
FY 2020 H1 2020 FY 2019 % Change % Change % Change
FY 2019 FY 2019 - H1 2020
- FY FY 2020 - FY
2020 2020
(UNAUDITED) (UNAUDITED) (AUDITED) (constant
currency)
Number of clients
(mn) 0.4 0.4 0.5 -3% 15%
Number of branches 433 431 423 2% 0%
OLP (1) (USD mn) 77.8 56.6 77.2 1% 5% 37%
Gross OLP 79.5 60.2 78.1 2% 6% 32%
Average OLP per client
(USD) 178 155 170 5% 9% 15%
-- Despite the disruption caused by COVID-19, ASA Savings &
Loans Ghana had a good year with client numbers down from 165K to
158K serviced from 129 branches, up 6, but with OLP increasing from
USD 41.6m to USD 42.3m, and OLP/Client increasing from USD 253 to
USD 269, up 6%. PAR>30 increased from 0.2% in 2019 to 0.4% in
2020.
-- ASA Nigeria performed resiliently with client numbers only
slightly down from 260K to 253K serviced from 263 branches, with
OLP down from USD 32.7m to USD 31.2m, and OLP/Client unchanged at
USD 129. PAR>30 increased from 2.7% in 2019 to 5.5% in 2020.
ASHA Microfinance Bank successfully completed the acquisition of
the Group's Nigerian NGO branches in 2020.
-- ASA Sierra Leone increased its number of clients from 34.3k
to 36.4k serviced from 41 branches, up 4. OLP increased from USD
2.8m to USD 4.3m and OLP/Client increased from USD 85 to USD 123
PAR>30 improved marginally from 5.1% to 4.5%
East Africa
FY 2020 H1 2020 FY 2019 % Change % Change % Change
FY 2019 FY 2019 - H1 2020
- FY FY 2020 - FY
2020 2020
(UNAUDITED) (UNAUDITED) (AUDITED) (constant
currency)
Number of clients
(mn) 0.3 0.3 0.3 -8% 6%
Number of branches 357 343 316 13% 4%
OLP (1) (USD mn) 45.4 36.8 51.7 -12% -9% 23%
Gross OLP 46.1 39.6 51.9 -11% -8% 17%
Average OLP per client
(USD) 145 131 149 -3% 2% 10%
-- ASA Kenya's number of clients went down from 101k to 92k
serviced from 100 branches, up 10. OLP decreased from USD 17.7m to
USD 12.6m and OLP/Client decreased from USD 175 to USD 142.
PAR>30 increased from 1.3% to 22%, once ASA Kenya stopped
providing moratoriums to existing clients.
-- ASA Uganda's number of clients went down from 101k to 81k
serviced from 98 branches, up 10. OLP decreased from 10.4m to USD
8.0m and OLP per client decreased from USD 103 to USD 100.
PAR>30 increased from 0.1% to 29.2%, once ASA Uganda stopped
providing moratoriums to existing clients.
-- ASA Tanzania's number of clients went down from 123k to 121k
serviced from 121 branches, up 19. OLP increased from USD 20.5m to
USD 21.5m and OLP/Client increased from USD 167 to USD 178.
PAR>30 increased from 0.1% to 2.5%.
-- ASA Rwanda's number of clients went down from 21k to 19k
serviced from 30 branches. OLP decreased from USD 3.0m to USD 2.9m
and OLP/Client increased from USD 14 to USD 156. PAR>30
increased from 0.8% to 10.1%.
-- ASA Zambia increased it number of clients from 2.1k to 5.4k
serviced from 8 branches, up 2. OLP increased from USD 179k to USD
372k and OLP/Client decreased from USD 86 to USD 72. PAR>30
decreased from 31.4% in 2019, due to a fraud case in one of its
eight branches that was identified and dealt with, to 5.8%.
Impact of foreign exchange rates
During FY 2020, currency movements of operating currencies in
Asia and Africa remained fairly stable against the US dollar with
some gains recorded in the Philippines and Myanmar. However, the US
dollar strengthened more than expected against currencies in three
markets, Kenya, Nigeria and Zambia which reduced the reported OLP
and OLP/client figures in USD. Overall, the currency movements
resulted in an increase of the FX translation reserve losses by
approximately USD 2m.
Funding
Unrestricted cash and cash equivalents remained high at
approximately USD 101m at year-end 2020. The Group managed to raise
approximately USD 174m in new funding in 2020. At end of 2020, the
Company had a funding pipeline of USD 225m future wholesale loans,
majority of which are supported by (agreed) term sheets and/or
draft loan documentation.
The Group has managed to secure waivers and/or no-action letters
from most Holding level lenders and a majority of the lenders to
our operating entities and we are confident that we will succeed in
obtaining waivers from our remaining lenders over the next few
months.
Outlook
We expect that the operating environment will remain challenging
in most of our markets in 2021. While we expect that there will be
a certain level of normalization of activities, we also anticipate
that there will be more COVID-19 related disruptions in various
countries in 2021, along with political uncertainties in some
markets such as in Myanmar.
Nevertheless, a substantial improvement of the operating
environment with less disruption caused by COVID-19 should lead to
better operational and financial performance.
While 2020 will go into the annals of our company as a lost year
in terms of growth and profits, we expect the business environment
to improve in 2021, continuing on the more positive trends we
observed in the second half of 2020, albeit below the level of past
performance in prior years.
Notice of Full Year Results
The Company expects to announce its results for the year ended
31 December 2020 in mid-May 2021. The date will be confirmed in due
course.
Enquiries:
ASA International Group plc
Investor Relations +31 6 2030 0139
VĂ©ronique Schyns vschyns@asa-international.com
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