Creating hope. Changing fortunes. ASA International Group PLC Presentation of H Results 30 August 2018

Transcription

1 Creating hope. Changing fortunes. ASA International Group PLC Presentation of H Results

2 Legal Disclaimer IMPORTANT: You must read the following disclaimer before continuing. The following applies to this document, and the information provided in connection with this document prepared by ASA International Group plc (the Company ) and together with its subsidiaries, (the Group ) or any person on behalf of the Company (collectively, the Information ). The Information has been prepared by the Company for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the Information or its accuracy, fairness or completeness. The Information and opinions contained herein are provided as at the date of this presentation and are subject to change without notice. These materials have not been independently verified. It is not the intention to provide, and you may not rely on these materials as providing a complete or comprehensive analysis of the financial or trading positions or prospects of the Group. 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3 Key Highlights ASA International Group PLC had a successful IPO with admission to the premium listing segment of the Official List of the FCA and to trading on the Main Market of the London Stock Exchange on 18 July 2018 ASA International has delivered a robust growth and profitability profile in H with: Number of clients up by 29.6% year-on-year exceeding 2 million as of 30 June 2018 Continued strong branch growth with number of branches up by 21.4% year-on-year to 1,557 (1) Net Profit on a normalized basis is up 27.8% compared to H (35.1% up on a constant currency basis) The quality of the loan portfolio further improved with PAR>30 down to 0.4% South Asia operations continued growth and increased profitability though slightly lower than expected performance due to currency depreciation Southeast Asia operations also showed growth and increased profitability with slightly lower than expected performance due to currency depreciation and slower loan growth West Africa operations strong with growth and profitability higher than expected performance due to faster loan growth East African operations particularly strong, reaffirming confidence in East Africa as a major future profit generator for the Group Source: ASA International consolidated audited financials 2017and reviewed financials H Note: (1) Adjusted for one-off USD 7.9 m IPO costs in 2018H1A 2

4 Financial Snapshot: What We Have Achieved ASA International has delivered a robust profitability profile, with H RoAA and RoAE of 8.1% and 39.0%, respectively Balance Sheet Income Statement US$mn H H Gross Customer Loans (1) Total Assets (2) Customer Deposits Debt and Borrowings Total Equity Profit for the Period Adj. Profit for the Period (3) KPIs Number of Clients ( 000s) 1,552 1,853 2,013 Number of Branches 1,283 1,387 1,557 Average OLP / client Cost / Income (4) 56.1% 53.8% 53.5% PAR>30dpd 0.7% 0.6% 0.4% RoAA 8.4% 8.0% 8.1% RoAE 33.4% 36.2% 39.0% Loan growth driven by increased branch productivity, and opening of new branches across geographies, supported by off-book BC portfolio growth with the total loan portfolio growing 11.4% in H on constant currency basis (US$333.7mn translated at end of 2017 fx rates) Consistently strong margins, supported by best-in-class asset quality Enhanced operating leverage as branches across the Group mature Consistently strong bottom line returns Source: ASA International consolidated audited financials 2017 and reviewed financials H Note: (1) Includes loans disbursed under the Business Correspondent and Partnership models in India (except for IDFC) in H Off-book IDFC BC Portfolio grew from US$ 17.7mn in 2017 to US$ 33.2 mn in H1 2018; (2) US$924,172 of unamortised processing fees were reclassified from liabilities (deferred income) to assets (loans) in 2017 financials disclosure;(3) Adjusted for one-off or exceptional items, primarily related to provisions in prior years and IPO costs in H Please refer to Appendix for further details; (4) Calculated as total operating expenses (excluding exchange rate difference) / total operating income; 3

5 Continued Growth at All Levels Branches As at H1 2018: 1,557 # of Clients (mn) (1) As at H1 2018: ~2.0mn 1,117 1,387 1, A 2017A 2018H1A 2016A 2017A 2018H1A Gross Customer Loans (US$mn) (1) Adj. Profit for the Year/Period (US$mn) (2) Gross Customer Loans (US$mn) Gross Loans per Client (US$) RoAA (3) RoAE (4) 8.3% 8.0% 8.1% 28.9% 36.2% 39.0% A 2017A 2018H1A 2016A 2017A 2018H1A Source: ASA International consolidated audited financials and reviewed financials H Note: (1) Includes Business Correspondent and partnership models in India (whereby ASAI India operates as an agent for its Business Correspondent partners), except IDFC clients; (2) Adjusted for one-off or exceptional items, primarily related to the release of provisions, and IPO costs for H Reported profit for the periods were: US$18.8mn (2016), US$29.3mn and US$8.5mn (H1 2018); (3) Calculated as profit for the year / average assets, TTM used for H1 2018; (4) Calculated as profit for the year / average equity, TTM used for H

6 Robust Asset Quality & Healthy Margins Gross Customer Loans and PAR > 30dpd (1) 0.7% 0.6% 0.4% Gross Yield, cost of funding and Net interest margin 34.9% 29.1% 31.9% 33.4% 25.4% 25.4% Loan portfolio quality continues to improve with PAR>30 down to 0.4% Increase in cost of funding since 2017 as local currency loans have replaced US$ loans, in addition to increased hedging of FX loans at country level, as well as growth in India (debt funded) 8.2% 8.6% 10.5% H H Gross Customer Loans (US$mn) PAR > 30dpf (US$mn) PAR > 30dpd Ratio H H Gross Yield (2) Cost of Funding (3) Net Interest Margin (4) Source: ASA International consolidated audited financials 2017 and unaudited management data as of 30 June Note: (1) Days past due; PAR >30dpd (US$mn) calculated as a proportion of gross customer loans; (2) Calculated as interest income / average interest earning assets (cash + due from banks + net customer loans); (3) Calculated as interest expense / average interest bearing liabilities (debt + customer deposits); (4) Calculated as net interest income / average interest earning assets. 5

7 Strong Funding Profile with Disciplined ALM Funding Breakdown (1) Favourable maturity profile with long-term funding of typically up to 5 years, compared to average client loan tenor of 6-12 months at issuance Funding from international lenders (e.g. Gates Foundation and OPIC) at the holding company level is deployed to subsidiaries unable to secure local funding at competitive rates via intercompany loans to support expansion Policy to minimise currency mismatch in third party funding (~97% of total funding, excluding equity, in local currency are hedged (7) ) and maintain strict policy to extract excess capital from countries in order to reduce local currency exposure Target to obtain deposit-taking licenses (8) to align assets with liabilities and reduce cost of funds (2) (3) (4) (5) * Most US$ loans from international lenders that are lent onwards to subsidiaries are hedged in local currency Source: ASA International consolidated audited financials and unaudited financials H Note: (1) Excludes interest payable. In H1 2018, this amounted to US$2.9mn; (2) Comprised of Gates Foundation and OPIC loans; (3) Comprised of Blue Orchard, Symbiotics, Oikocredit and Incofin loans; (4) Comprised of term loans from banks and financial institutions at the subsidiary level, and funding MAS Financial Services for ASAI India; (5) Includes restricted security deposits in the Philippines; (6) Derived using management data as at 30 June 2018 and based on total funding (debt funding and deposits) excluding US$24.4mn cash and bank balance at ASAI Holding; (8) Deposit-taking licenses already in force in Ghana, Myanmar, Nigeria and Rwanda. 6

8 Diversification Reflected in Key Operational Indicators Branches # of Clients (1) Gross Loans (1) South Asia % Loans RoAA 54.6% 7.3% 1, mn US$315.9mn South East Asia % Loans RoAA 17.4% 4.7% West Africa % Loans RoAA 20.1% 19.4% Philippines Tanzania Pakistan Sri Lanka Nigeria Uganda India Kenya Ghana Sierra Leone Myanmar Rwanda East Africa % Loans RoAA 7.9% 8.5% Diversified Business Disciplined Roll-out Low Concentration Risk Increasing Scale Source: ASAInternational unaudited management data as at Note: (1) Includes Business Correspondent and Partnership models in India (whereby ASAI India operates as an agent for its Business Correspondent partners), except 61k IDFC clients. 7

9 Summary of Medium Term Targets Key Operational Targets Branch Growth ~12% CAGR OLP / Client ~US$250 by 2022E Clients / Branch ~1,600 Debt / Loans ~70% NIM (1) > 20% Cost / Income Mid-40s PAR > 30 Remain Low US$ Earnings Growth, YoY 20 25% RoAA > 7% RoAE > 30% Dividend Payout Ratio (% prior year net income) 30% Based on ASA International management business plan. (1) Net Interest Income divided by average interest earning assets (loans, cash and equivalents, incl. due from banks). Note: RoAE and dividend payout targets consistent with management target of ~20% equity / assets. 8

10 Key Events and Outlook Receipt of NBFC-MFI registration in India to allow the Company to further capitalise ASAI India and attract lower-cost debt funding Ongoing commitment to CSR and social development activities, including e.g. in India (vocational training centres), Ghana and Nigeria (health screening, water aid and school donations), and Philippines (scholarship grants) Positive financial and operational performance over the first half of 2018 continued post H1 period end The Board remains confident in the future prospects for the business and the Board believes the Company is on track to achieve fullyear results in line with its expectations 9

11 Appendix 10

12 Who We Are One of the World s Largest International Microfinance Institutions Socially Responsible Loans to a Large Addressable Market of Un-banked, Low-Income Female Micro-entrepreneurs Proven Microfinance Institution with a Rich Heritage, Delivering Exceptional Growth Through Disciplined Application Unique Emerging Market Exposure with a Massive Market Opportunity Scalable Model with Replicable Roll-out and Embedded Growth Internationally acclaimed ASA Model of microfinance Market based interest rates and disciplined risk management ~2.0mn clients (1) and 1,557 branches as at H (~1.8mn (1) clients and 1,387 branches as at 2017YE) ~US$315mn of gross loans (2) with ~43% CAGR, and ~0.5% avg. PAR (3) since 2013 ~US$29mn profit in FY 2017 with ~39% CAGR and ~25% avg. RoAE, since high-growth markets across Asia and Sub-Saharan Africa Includes India, Pakistan, Ghana, Nigeria, four East African countries, the Philippines, Myanmar and Sri Lanka Addressable market of ~365mn potential clients in existing countries, of which ~134mn borrow from informal sources (4) Significant greenfield opportunity Low-cost, decentralised ASA Model is easily replicable and highly scalable in existing markets and new countries, adjusted for local application Strong embedded growth across nascent branch network, with ~42% of existing branches less than 3 years old Proprietary, in-house global IT system supports scalability and provides platform for introduction of digital financial services Strong Commitment to Financial Inclusion and Socioeconomic Progress High US$ Returns, with a Diversified and Managed Risk Profile 11 Source: ASA International consolidated audited financials as at 31-Dec-17 and unaudited management accounts as of 30 June 2018; World Bank Global Findex database (2017). Note: (1) Number of clients comprises borrowers that includes Business Correspondent agreements (whereby ASA India acts as an agent for three banks) and a partnership agreement (whereby ASAI India locates, screens and recommends potential clients for loans which are funded by a credit facility from MAS Financial Services in exchange for fees), except 61k (as at 2017YE) IDFC Bank Limited ( IDFC ) clients in India. ASA International has an additional number of non-borrowing clients (such as savers in Ghana) who make small deposits prior to receipt of a loan; (2) Includes loans disbursed through the Business Correspondent and partnership models, except IDFC; (3) PAR = portfolio at risk (> 30 days). Average excluding one-off demonetisation impact in India in 2016; (4) Low income, working age females. Based on World Bank Global Findex database (2017).

13 ASA Model Distinguishing Features A Rich Heritage ASA International has internationally exported the ASA Model of microfinance developed by ASA NGO Bangladesh NGO established by Md. Shafiqual Haque Choudhury in 1978 who has been President since inception, and is separately the Co-founder and Chairman of ASA International Offers credit to ~6.8mn poor and underprivileged borrowers across ~3,000 branches, with OLP of ~US$1.9bn Internationally recognised as one of the world s most efficient MFIs (1), attributable to the rigorous application of a standardised, low-cost and decentralised model Group Selection without Joint Liability Loans Granted Exclusively for Income Generating Activities Full Repayment via Instalments Before Eligible for New Loan No Incentive or Bonus Payments for Operating Staff High Touch Client Interaction through Weekly Collection (2) Ongoing Assessment of Client Needs, Benefits, and Satisfaction Repeat Loan Cycles with Set Limits Low Ticket Size (3) Assisted over 50 MFIs (including Bandhan in India) in 16 countries through visits and strategic advice International Roll-out of the ASA Model has Resulted in Sustainable Growth and Returns 12 Source: ASA NGO Bangladesh management data Note: (1) Most efficient MFI in the world in 2007 according to Forbes magazine; (2) Monthly collection in Pakistan and bi-weekly in Myanmar for ASA International as per local market practice; (3) Loan size ranging predominantly from the local currency equivalent of US$120 to US$500.

14 Our Clients and Locations Our Clients Our Branches Typical Client Profile Female Income broadly around US$3.20 per day Strong social ties with local community Predominantly urban / semi-urban Similar enterprises in services, trading, manufacturing, agriculture Similar typical customer profile supports scalability global replication, local application Same ASA model for similar clients across 12 different markets 13

15 Balance Sheet US$mn H H Cash and Cash Equivalents Loans and Advances to Customers Due from Banks Financial Instruments Held to Maturity Available for Sale Investment Property and Equipment Deferred Tax Assets Other Assets Goodw ill Total Assets Debt Issued and Other Borrow ed Funds Customer Deposits Retirement Benefit Liability Current Tax Liability Deferred Tax Liability Other Liabilities and Provisions Total Liabilities Issued Capital Retained Earnings Revaluation Reserve Foreign Currency Translation Reserve (23.3) (25.8) (31.3) Total Equity Attributable to Shareholders Non-Controlling Interest Total Equity

16 Income Statement US$mn H H Interest and Similar Income Interest and Similar Expense (8.1) (21.1) (16.1) Net Interest Income Other Operating Income Total Operating Income Credit Loss Expense (0.4) (0.0) (0.5) Net Operating Income Personnel Expenses (13.9) (28.3) (17.5) Depreciation of Property and Equipment (0.4) (0.9) (0.7) Other Operating Expenses (10.5) (19.0) (11.2) Exchange Rate Differences (0.3) (1.2) (0.1) Total Operating Expenses (25.1) (49.5) (29.5) Profit Before Tax Income Tax Expense (6.2) (12.8) (8.8) Witholding Tax Expense (0.2) (1.3) (0.2) Profit for the Year Profit for the Year Attributable to: Equity Holders of the Parent Non-Controlling Interest

17 Overview of Segments South Asia South East Asia West Africa East Africa Sierra India Pakistan Sri Lanka Philippines Myanmar Ghana Nigeria Tanzania Kenya Uganda Rwanda Zambia Leone (1) Segmental Breakdown Gross Loans (2) Branches Clients (2) 8% 14% South Asia South East Asia West Africa East Africa 20% 55% 17% South Asia South East Asia West Africa East Africa 39% 24% 23% South Asia South East Asia West Africa East Africa 21% 10% 22% 47% Source: ASA International consolidated audited financials as at 30-June-18. Note: (1) Expected to commence operations in H2 2018; (2) Includes Business Correspondent and partnership models (whereby ASAI India operates as an agent for its Business Correspondent partners), except 61k IDFC clients in India. 16

18 Breakdown of Operating Segment Financials As at 30 June 2018 West Africa East Africa South Asia South East Asia Non-Operating Total Segments Eliminations Consolidated External interest and similar income Inter-segment interest income (1.7) -- ExternaI interest expense (1.7) (0.5) (10.1) (1.9) (1.7) (16.1) -- (16.1) Inter-segment interest expense (0.3) (0.7) (0.4) (0.4) -- (1.7) Net interest income (0.0) External other operating income (0.0) Inter-segment other operating income (1.0) -- Other inter-segment expense (0.0) (0.9) -- (1.0) Total operating income Credit loss expense (0.1) 0.1 (0.4) (0.1) -- (0.5) -- (0.5) Net operating income Personnel expenses (4.4) (2.6) (5.8) (3.9) (0.8) (17.5) -- (17.5) Exchange rate differences 0.0 (0.1) (0.1) (0.0) 0.0 (0.1) -- (0.1) Other operating expenses (2.6) (1.5) (3.2) (3.2) (1.4) (11.9) -- (11.9) IPO related expenses (7.9) (7.9) -- (7.9) Tax expenses (3.1) (0.6) (4.2) (0.8) (0.2) (9.0) -- (9.0) Segment profit (9.4) Total assets (82.3) Total liabilities (32.7) Source: ASAInternational consolidated unaudited financials as at 30-June

19 South Asia (As at June 2018, unless otherwise stated) India Pakistan Sri Lanka Name of Entity ASA International India Microfinance Private Limited ASA Pakistan Ltd Lak Jaya Micro Finance Ltd. Type NBFC (1) Lending Company (2) Lending Company (3) Regulator Reserve Bank of India Securities and Exchange Commission of Pakistan / State Bank of Pakistan Ownership 90% 100% 97% Inception Gross Loans (US$mn) 96.1 (4) Branches Clients 545, ,715 70,337 PAR>30 0.8% 0.3% 2.4% * ASAI India operates as an agent for its Business Correspondent partners Gross Loan Branches Clients Contribution (4) Contribution (4) Currently Unregulated 55% 39% 47% Source: ASA International consolidated audited financials and unaudited management data as at 30-Jun-18. Note: (1) Non-deposit taking NBFC-MFI license received in July 2018; (2) Application for deposit taking microfinance bank license pending; (3) Application for deposit taking microfinance company license pending; (4) Includes Business Correspondent and Partnership models (whereby ASAI India operates as an agent for its Business Correspondent partners), except 61k IDFC clients in India. 18

20 South East Asia (As at June 2018, unless otherwise stated) Philippines Myanmar Name of Entity Pagasa Philippines Lending Co. Inc. ASA Microfinance (Myanmar) Ltd. Type Lending Company (1) Deposit Taking Microfinance Institution (2) Regulator Security and Exchange Commission of the Philippines Ownership 100% 100% Inception Gross Loans (US$mn) Branches Clients 305, ,637 PAR>30 0.2% 0.3% Financial Regulatory Department of the Ministry of Finance Gross Loan Contribution Branches Clients Contribution 17% 23% 22% Source: ASA International consolidated audited financials and unaudited management data as at 30-June-18. Note: (1) Application for non-deposit taking finance company license pending; (2) Savings are limited to mandatory savings. A full deposit taking license including voluntary savings will be applied for in the course of

21 West Africa (As at June 2018, unless otherwise stated) Nigeria Ghana Sierra Leone Name of Entity Association for Social Improvement and Economic Advancement and ASHA Microfinance Bank Ltd ASA Savings & Loans Ltd ASA Microfinance (Sierra Leone) Ltd. Type Deposit Taking NGO and Microfinance Bank (1) Deposit Taking Savings and Loan Bank Lending Company Regulator Central Bank of Nigeria Bank of Ghana Bank of Sierra Leone Ownership 100% 100% 100% Inception Gross Loans (US$mn) Branches Clients 228, ,891 22,616 PAR>30 0.2% 0.1% 0.4% Gross Loan Contribution Branches Clients Contribution 20% 24% 21% Source: ASA International consolidated audited financials and unaudited management data as at 30-June-18. Note: (1) In the process of becoming a nationwide bank subject to approval from the Central Bank of Nigeria. 20

22 East Africa (As at June 2018, unless otherwise stated) Tanzania Uganda Kenya Rwanda Name of Entity ASA Microfinance ASA Microfinance ASA Microfinance (Uganda) Ltd. ASA Limited (Tanzania) Ltd. (Rwanda) Ltd. Type Lending Company Lending Company Lending Company Deposit Taking Microfinance Institution Regulator Unregulated Uganda Microfinance Regulatory Authority Unregulated (1) National Bank of Rwanda Ownership 100% 100% 100% 100% Inception Gross Loans (US$mn) Branches Clients 66,379 60,202 58,230 7,918 PAR>30 0.3% 0.3% 0.6% 0.8% Gross Loan Contribution Branches Clients Contribution 8% 14% 10% Source: ASA International consolidated audited financials and unaudited management data as at 30-June-18. Note: (1) Holds a business permit from the Nairobi City Council for the provision of nondeposit taking microfinance services. 21

23 Management Team Dirk Brouwer Chief Executive Officer Co-Founder and Executive Director of ASAI since inception 11 Aminur Rashid Executive Director, Operations Executive Director, Operations At ASAI 28 since Director of ASA NGO Bangladesh, Tanwir Rahman Chief Financial Officer 08 Martijn Bollen * General Counsel 11 CFO of ASAI since July Finance Director General Counsel at ASAI since inception of BRAC and BRAC International, Azim Hossain Director Investments, Treasury and Risk Management Director Investments, Treasury and Risk Management of ASAI since inception 34 Md. Enamul Haque Chief Operating Officer 35 Chief Operating Officer of ASAI since 2008 Mischa Assink * 07 Chief Accountant Group Chief Accountant of ASAI since 2011 # = Number of years of experience in the microfinance sector * = Also responsible for IR function 22 Note: ASA International Holding, together with its subsidiaries, is also referred to herein as the Group.