Botswana Insurance Holdings Limited (BIHL) has seen its equity-accounted earnings decrease by 39% to P79 million, mainly due to the underperformance of Letshego in which BIHL is a 27% shareholder.
Letshego's results, also released last week, showed that net credit impairment charges were P333 million from P221 million the previous year, a 34% increase, driven by the higher-than-anticipated delinquencies in test and learn programs (Individual lending in Botswana and Mobile Loans in Kenya).
The microfinancier also saw a significant increase in its non-performing loan (NPL) portfolio which grew to 11% of its loan book from 8% in 2023.
As a result, the company's profit before tax dropped by 76% from P71 million to P17 million.
"The group equity value decreased to P5,27 billion from P5,56 billion recorded in June 2023," BIHL told shareholders. "The decrease in group equity value is driven by a decrease in the net asset value, especially Letshego whose carrying value was impaired by P189 million."
BIHL also saw a significant drop in profit before tax to P182 million from P640 million in the same period last year, a massive 72% decline. Apart from Letshego's contributions, the company also blamed lower unrealised investment mismatch profits recognised by the life insurance business due to adverse changes in interest rates.
BIHL also stated that in the prior period, profit before tax included a once-off P142 million profit from the disposal of a 37.62% shareholding in Funeral Services Group.
Image source: Sunday Standard