WINDHOEK, Sept. 29 – Letshego Holdings Namibia (LHN) listed on the Namibian Stock Exchange (NSX) on the 28th of September 2017 following an initial public offer at a price of 380 cps, where 100 million shares were made available to the public.
LHN has two wholly owned subsidiaries, Letshego Bank (Namibia) Limited (LBN) and Letshego Micro Financial Services (Namibia) (Pty) Limited (LMFSN). LBN and LMFSN has a network of two branches and 14 customer access points across Namibia offering the provision of short to medium-term unsecured consumer loans to salaried employees of the public and private sectors.
“With the attainment of a banking license and new ownership structure, LBN has transferred 52% of its loan book to LMFSN, which will enable LBN to focus on providing retail banking solutions, while LMFSN will continue with their micro-lending activities,” Analysts from IJG Research said.
The retail banking products and services will include a range of simple and affordable transactional and savings solutions and services that will predominantly target the lower to middle income segments of the working population.
The Letshego loan book currently consists mainly of government employees and makes use of a deduction at source model. A government deduction code, which allows the holder to collect instalments directly off the government centralised payroll system, has been instrumental in limiting the credit risk of Letshego’s lending activities.
In conjunction with the use of credit management processes, which include credit insurance, LHN has kept their non-performing loans below 1% of total loans and advances. Over the last three years Letshego Namibia has shown strong growth in profitability, as profit after tax has grown by 23% compounded annually.
“According to the prospectus, this has been achieved through good growth in assets and effective credit management processes. The net interest margin on average loans and advances is also much higher than a conventional retail bank, averaging 13.9% over the last three years. This is due to the high interest rates that are charged on uncollateralised loans,” IJG said.
LBN lending rates are currently capped at 1.6x the Prime Interest Rate, whilst LMFSN maximum lending rate is capped at 2x the Prime Interest Rate as per the Usury Act. – Ronald Geingob