TIDMASAI
RNS Number : 1461X
ASA International Group PLC
26 August 2020
July 2020 business update in response to COVID-19
Amsterdam, 26 August 2020 - ASA International, ("ASA
International", the "Company" or the "Group"), one of the world's
largest international microfinance institutions, today provides the
following update of the impact of COVID-19 on its business
operations.
-- The immediate health impact of COVID-19 on the Company's operations remained low.
-- Liquidity has remained stable with approximately USD 110m of
unrestricted cash and cash equivalents across the Group on 31 July
2020.
-- Since the end of June 2020, the Group secured approximately
USD 8m of new loans from international and local lenders and the
current pipeline of funding deals being negotiated totals
approximately USD 200m.
-- Despite the challenging operating conditions , collection
efficiency in July remained in the mid to high nineties in eight
operating countries, which in the aggregate represented more than
70% of the pre-tax profitability of all the Group's country
operations in 2019.
-- In view of the uncertain business environment which our
clients are facing, disbursements as percentage of collections are
gradually increasing, but continued to be lower than collections in
many operating countries , with the exception of Ghana, Nigeria,
Sierra Leone, Tanzania, Rwanda and Zambia.
-- As a result, the number of clients reduced by 10% to 2.3m,
while OLP reduced by 13% ( 10 % in constant currency) to USD 408.5m
YTD on 31 July 2020.
-- Selected moratoriums on loan repayments ("Moratorium")
provide clients most affected by the COVID-19 related disruption
more time to strengthen their income generating capacity, but, in
the long run, may weaken the credit quality of outstanding loans
and thereby increase operational and financial risks.
-- The aggregate Moratorium amounts to USD 33.1m, which
represents 8% of the Group's outstanding loan portfolio ("OLP") and
is primarily concentrated in India (37% of the aggregate
Moratorium), the Philippines (28%), Kenya (15%) and Uganda
(10%).
-- The primary causes for the substantial Moratorium amount are:
(i) long 10-12 weeks lockdowns in India, the Philippines, and
Uganda; (ii) long-term closure of our clients' regular trading
market places in Kenya and Uganda; and (iii) a government
sanctioned general moratorium on the repayment of loan instalments
upon a client's request in India.
-- The Group's 2020 half - year results, including an
appropriate provision to reflect the impact of Covid-19, are
scheduled to be announced on 22 September, by which time the
government sanctioned moratorium on loan repayments in India will
have been expired for 21 days. This should provide the Company,
particularly in India, with more valuable information about the
collection efficiency and the quality of the Group's loan
portfolio.
Health impact of COVID-19 on our communities
-- As of 31 July 2020, the immediate health impact of COVID-19
on the Company's operations remain s low with 18 of our 12,535
staff members confirmed as infected , but with no deaths . The
number of confirmed infections amongst our 2.3m clients increased
to 176, resulting in 9 deaths until now .
-- While the infection rate in our operating countries continues
to increase , t he speed of growth and the absolute number of
confirmed infections and , in particular, the number of deaths
remain relatively low in comparison to Europe and the U.S.A. This
is illustrated by the relatively few deaths in each of our
operating countries as percentage of the size of the population
which ranges between zero to 25 deaths per million population in
our operating countries compared to 108 to 846 deaths per million
in the U.S.A. and the wealthiest European countries.
Funding
-- Unrestricted cash and cash equivalents remained stable at
approximately USD 110m on 31 July 2020.
-- The Company secured approximately USD 8m of new loans from
local and international lenders since 29 June 2020.
-- About 70% of the Company's USD 200m pipeline of future
wholesale loans are supported by (agreed) term sheets and/or draft
loan documentation, which is up 10% compared to 29 June 2020; the
terms and conditions of the remaining 30% are being negotiated with
lenders.
Collection efficiency (1)
Country 19-26 27 25-30 31 7 14 21 28 5 12 19 26
April April-3 May May-6 June-13 June-20 June-27 June-4 July-11 July-18 July-25 July-31
May June June June June July July July July July
Nil
India (2) Nil Nil 19% 37% 40% 47% 50% 53% 49% 41% 37%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Pakistan 55% 60% 90% 93% 95% 92% 94% 95% 97% 96% 96% 95%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
93%
Sri Lanka 1% 1% 40% 69% 66% (4) 91% 95% 91% 90% 93% 94%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Myanmar Nil Nil 89% 91% 95% 95% 97% 95% 96% 96% 97% 97%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
The
Philippines Nil Nil 28% 59% 64% 66% 69% 74% 71% 72% 73% 74%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Ghana 100% 95% 102% 100% 99% 100% 100% 100% 99% 99% 99% 101%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Nil-Eid
Nigeria Nil Nil (3) 92% 93% 94% 94% 95% 91% 91% 89% 94%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Sierra
Leone 87% 99% 96% 94% 94% 95% 98% 101% 97% 95% 100% 102%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Kenya Nil Nil 77% 70% 71% 76% 88% 88% 78% 73% 72% 75%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Tanzania Nil Nil 94% 97% 98% 98% 98% 99% 99% 99% 99% 99%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Uganda Nil Nil Nil Nil 22% 33% 40% 41% 46% 44% 47% 53%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Rwanda Nil Nil 66% 63% 77% 79% 83% 82% 84% 82% 88% 89%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
Zambia 87% 99% 98% 97% 98% 98% 98% 99% 98% 98% 99% 99%
------ -------- -------- ------ -------- -------- -------- ------- -------- -------- -------- --------
(1) Collection efficiency refers to actual collections from
clients divided by expected collections for the period; since
any moratorium on the repayment of loans are only granted to
clients after the end of the month, the collection efficiency
is not affected by the grant of such moratorium;
(2) Nil implies no collections during the period
(3) Nil - Eid refers to no branch operations due to official
Eid holidays
(4) Sri Lanka improved due to a write-off of overdue loans
caused by the Government imposed debt relief program and Easter
Sunday Bombings
-- Collection efficiency across the Group continues to increase
with 8 out of 13 operating countries reporting collection
efficiency at the mid or high nineties on 31 July 2020.
-- Collection efficiency remains relatively low in: (i) India,
due to (a) clients making use of the government-imposed moratorium;
(b) the imposition of recent targeted lockdowns in Bihar, West
Bengal and Assam caused by increases in COVID-19 cases, and (c)
flooding in West Bengal and parts of Assam; (ii) the Philippines,
where our clients' business activities have been substantially
disrupted by (a) a ten-week country-wide lockdown, and (b) ongoing
disruption with regional and/or district lockdowns; (iii) Uganda,
where our clients also faced a long ten-week lockdown and ongoing
restrictions on the movement of people; and (iv) Kenya, where many
market places where our clients traditionally used to trade, remain
closed or severely restricted.
-- Once collection efficiency reaches more than 90% and
disbursement of repeat and/or new loans continues , in our
experience the repayment discipline of all clients in a lending
group tend s to improve.
-- In many of our operating countries, the Group started early
with increased lending to clients, which generated a positive
response and helped in stabilizing our operations.
Disbursements vs collections of loans (5)
-- With the business environment gradually improving, weekly
disbursements of fresh loans continue to gradually increase in
amount and as a percentage of weekly collections.
Country 7 June-13 14 June-20 21 June-27 28 June-4 5 July-11 12 July-18 19 July-25 26 July-31
June June June July July July July July (6)
India Nil 1% 8% 12% 25% 37% 74% 61%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Pakistan 60% 60% 60% 68% 79% 82% 87% 88%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Sri Lanka 12% 43% 52% 27% 101% 57% 40% 71%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Myanmar 61% 68% 71% 68% 76% 80% 95% 62%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
The
Philippines 19% 40% 61% 46% 80% 69% 70% 73%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Ghana 109% 105% 105% 128% 130% 107% 110% 116%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Nigeria 70% 82% 84% 78% 102% 103% 116% 86%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Sierra Leone 85% 91% 99% 66% 122% 101% 113% 93%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Kenya 63% 56% 67% 70% 74% 84% 67% 76%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Tanzania 52% 65% 70% 76% 83% 118% 123% 113%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Uganda Nil Nil Nil 1% 15% 46% 51% 32%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Rwanda 106% 113% 101% 92% 98% 52% 98% 108%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
Zambia 91% 113% 89% 68% 199% 160% 176% 157%
---------- ----------- ----------- ---------- ---------- ----------- ----------- -----------
(5) Disbursements vs collections refers to actual loan disbursements
made to clients divided by total loans collected from clients
in the period
(6) Slowdown of branch operations due to official EID holidays
in latter part of this week;
Development of Clients and Outstanding Loan Portfolio
-- As a result of (i) the lockdowns, which effectively froze the
outstanding loan portfolio ("OLP"), (ii) the challenging business
environment our clients faced during and after the lockdowns, and
(iii) the Company's initial policy to limit or reduce the amount of
fresh loan disbursements immediately following the end of the
lockdowns, the Group's number of clients reduced by 9.7% from 2.5m
by year-end 2019 to 2.3m as of 31 July 2020, and OLP reduced by 13%
(10% in constant currency) YTD from USD 467m by year-end 2019 to
USD 408m as of 31 July 2020.
Clients OLP in USDm
------------------------- -------------------------
Delta Delta
Countr y Dec/19 Jul/20 Delta Dec/19 Jul/20 USD CC
India 732 713 -3% 181,9 167,3 -8% -4%
Pakistan 439 405 -8% 62,5 54,0 -14% -8%
Sri Lanka 63 54 -14% 9,4 8,4 -11% -9%
Myanmar 152 136 -10% 31,5 30,1 -5% -14%
The Philippines 340 297 -13% 52,7 46,5 -12% -18%
Ghana 165 141 -15% 41,6 35,7 -14% -15%
Nigeria 260 213 -18% 32,7 23,8 -27% -30%
Sierra Leone 34 30 -11% 2,9 3,2 11% 10%
Kenya 101 79 -22% 17,6 11,9 -32% -40%
Tanzania 123 100 -18% 20,5 16,1 -22% -26%
Uganda 101 93 -8% 10,4 8,5 -19% -22%
Rwanda 21 19 -7% 3,0 2,7 -9% -8%
Zambia 2 4 77% 0,2 0,3 73% 56%
Total 2.533 2.286 -10% 467 408 -13%
Selected moratorium on loan repayments
-- In view of the challenging circumstances our clients face due
to the disruption caused by COVID-19, the Company established a
policy to provide clients with more time to pay their regular loan
installments by offering, a temporary moratorium on the repayment
of loan installments.
-- Providing a moratorium on loan repayments is usually only
granted under exceptional circumstances, such as major natural
calamities like major floods, earthquakes, and droughts.
-- It is the Company's policy to gradually reduce and ultimately
eliminate any such temporary moratorium on loan repayments.
Clients under moratorium As %
Countries March April May June July of Clients
India 0 0 0 182,318 181,878 25%
Pakistan 0 0 0 0 0 0%
Sri Lanka 0 0 0 37,891 9,002 17%
Myanmar 2,307 2,101 35,056 12,394 7,876 6%
The Philippines 1,297 0 57,130 145,086 65,405 22%
Ghana 0 0 0 0 0 0%
Nigeria 0 0 4,042 10,523 9,763 5%
Sierra Leone 0 91 1,225 1,336 1,178 4%
Kenya 20,453 17,366 9,660 7,778 26,697 34%
Tanzania 0 194 5,323 4,162 0 0%
Uganda 8,269 0 0 75,360 59,563 64%
Rwanda 436 0 7,746 7,886 4,703 24%
Zambia 0 0 0 0 0 0%
Total 32,762 19,752 120,182 484,734 366,065 16%
Moratorium amounts (in USD thousands) As %
As % of
Countries March April May June July Total of OLP Total Moratorium
India 0 0 0 5,831 5,315 11,146 7% 34%
Pakistan 0 0 0 0 0 0 0% 0%
Sri Lanka 0 0 0 1,154 248 1,402 17% 4%
Myanmar 40 41 692 328 239 1,341 4% 4%
The Philippines 15 0 917 6,179 2,087 9,198 20% 28%
Ghana 0 0 0 0 0 0 0% 0%
Nigeria 0 0 135 459 425 1,019 4% 3%
Sierra Leone 0 1 11 20 21 52 2% 0%
Kenya 682 436 2,167 737 814 4,837 41% 15%
Tanzania 0 5 146 114 0 266 2% 1%
Uganda 77 0 0 1,727 1,562 3,366 40% 10%
Rwanda 5 0 165 224 128 522 19% 2%
Zambia 0 0 0 0 0 0 0% 0%
Total 819 484 4,233 16,773 10,840 33,148 8% 100%
As of 31 July 2020, total moratorium on loan repayments granted
to clients amounted to USD 33.1m, which represents 8% of the
Group's OLP.
-- While this increases the risk profile of the Group in the
short term, various factors and developments provide confidence
that the large majority of loans under moratorium will be repaid
over time.
-- The aggregate number of clients benefiting from a moratorium
and the total amount of moratorium granted has gone down from 485K
and USD 16.7m in June to 366K and USD 10.8m, respectively, in July.
It is expected that this trend line will continue.
-- In particular, the moratorium granted to clients in the
Philippines went down from 145K clients and USD 6.2m by the end of
June to 65K clients and USD 2.1m at the end of July.
-- There has been no need to provide a moratorium to clients in
Pakistan and Ghana, which are the Group's two most profitable
operations.
-- India's moratorium amounts to USD 11.1m, which represents 34%
of the total moratorium amount and is artificially high, because
the Government allowed each client to opt for a moratorium at no
additional (reputational) cost to the client until the end of
August this year.
-- The strength and influence of the credit bureau in India,
where each microfinance loan is required to be registered, will be
an important disciplinary factor for Indian clients to remain
current on their loans.
-- The general view of the market is that most of the Company's
and other microfinance clients are not distressed and unable or
unwilling to repay their loans. The economic disruption of COVID-19
has reduced the income generating activities of many of the Group's
clients in the short term, but, while clients are cautious, their
medium-term prospects for generating a satisfactory income remain
good, particularly when the business environment continues to
improve.
Enquiries:
ASA International Group plc
Investor Relations
+31 6 2030 0139
Véronique Schyns vschyns@asa-international.com
About ASA International Group plc
ASA International 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.
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