ASA International February 2022 business update

RNS Number : 5096F

ASA International Group PLC

22 March 2022

 

  Press release

ASA International Group plc February 2022 business update

Amsterdam, The Netherlands, 22 March 2022 - 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 as at 28 February 2022.

· Liquidity remains high with approximately USD 103m of unrestricted cash and cash equivalents across the Group.

· The pipeline of funding deals under negotiation totalled approximately USD 211m.

· With the exception of India and Myanmar, all other operating subsidiaries continued to achieve collection efficiency of more than 90% and 9 countries achieved more than 95%.

· India collections remained at 76%, due to the substantial overdue collections and moratoriums provided to clients. Collection efficiency, excluding instalments due from clients receiving the one-time loan restructuring offered by the Reserve Bank of India ('RBI'), increased to 102%.

· Collections in Myanmar decreased to 72%, due to the ongoing conflict and an internet and electricity outage in the conflict affected areas.

· T he benchmark PAR>30 for the Group, including off-book loans and excluding loans overdue more than 365 days, slightly increased from 6.4% to 6.8%, primarily due to the end of the moratoriums in Myanmar, and PAR>90 decreased from 4.0% to 3.5%.

· The PAR>30 for the Group's operating subsidiaries, excluding India and Myanmar, slightly increased from 1.8% to 1.9%.

· Excluding all loans which have been overdue for more than 180 days and, as a result, have been fully provided for, PAR>30 increased from 3.8% to 4.6%.

· Disbursements as percentage of collections exceeded 100% in 6 countries. The decreasing percentage in India was primarily due to the strategic decision to reduce disbursements.

· With the number of clients broadly stable at 2.4m (slightly higher than in January and 2.9% lower than in February 2021), and the continuing strategic focus in India on only collections , Gross OLP decreased to USD 424m (0.2% lower than in January 2022 and 7% lower than in February 2021).

· The moratorium amount decreased to USD 23.8 m, and is composed of the restructured loans of certain distressed clients in India as per the RBI guidelines. No other operating subsidiary granted moratoriums.

Health impact of COVID-19 on staff and clients

· Since March 2020, the number of staff members confirmed as infected by Covid increased to 549 of over 12,800 staff , with two deaths . Confirmed infections amongst 2.4m clients increased to 22,791 from 21,659 in the previous month, resulting in 697 deaths since the start of the pandemic. Of the 697 client deaths across the Group, 451 took place in Myanmar, with no deaths occurring in February 2022.

Funding

· Unrestricted cash and cash equivalents remained high at approximately USD 103m.

· The Company secured approximately USD 6m of new loans from local and international lenders in February 2022.

· The majority of the Company's USD 211m pipeline of future wholesale loans are supported by (agreed) term sheets and/or draft loan documentation. The terms and conditions of the remaining loans are being negotiated with lenders.

Collection efficiency until 28 February 2022 ⁽¹⁾  

Countries	Sep/21	Oct/21	Nov/21	Dec/21	Jan/22	Feb/22
India	64%	70%	69%	74%	76%	76%
Pakistan	99%	99%	99%	99%	99%	100%
Sri Lanka	Nil(2)	91%	92%	94%	93%	93%
The Philippines	96%	97%	97%	97%	98%	98%
Myanmar	55%(3)	68%(3)	75%(3)	78%(3)	78%(3)	72%(3)
Ghana	99%	100%	99%	99%	99%	99%
Nigeria	95%	96%	97%	96%	95%	96%
Sierra Leone	91%	93%	92%	92%	92%	92%
Kenya	100%	100%	100%	100%	99%	100%
Uganda	89%	94%	98%	100%	100%	100%
Tanzania	100%	100%	100%	100%	100%	100%
Rwanda	96%	97%	97%	97%	97%	97%
Zambia	100%	99%	99%	99%	100%	100%
(1) Collection efficiency refers to actual collections from clients divided by realizable collections for the period. It is calculated as follows: the sum of actual regular collections, actual overdue collections and actual advance payments divided by the sum of realizable regular collections, actual overdue collections and actual advance payments. Under this definition collection efficiency cannot exceed 100%. (2) The collection efficiency for 1-29 September 2021 is nil due to the lockdowns in Sri Lanka. (3) Collections are impacted by the ongoing lockdowns and civil unrest in some areas of our operations.

· Collection efficiency across the Group increased or remained broadly stable compared to the previous month in all countries .

· Collections in India remained at 76%, due to the substantial overdue collections and moratoriums provided to clients. Collection efficiency, excluding instalments due from clients receiving the one-time loan restructuring, increased to 102%.

· Collection efficiency in India, including regular and overdue collections as well as advance payments, increased to 101% as a percentage of the regular, realizable collections, including advance payments. The substantial difference is due to the Group's policy that any loan instalment paid is first credited against the oldest outstanding amount overdue. This has an adverse impact on India's monthly collection efficiency, which is further aggravated by the relatively long duration of the loans disbursed in India. This adjusted collection efficiency metric illustrates that most clients in India continue to make payments on their loans due.

· Collections in Myanmar decreased to 72%, due to the ongoing conflict and an internet and electricity outage in the conflict affected areas.

Loan portfolio quality up to and including February 2022 ^{(5, 6, 7)}

		Gross OLP (in USDm)							Non-overdue loans							PAR>30 less PAR>180
		Dec/21		Jan/22		Feb/22			Dec/21		Jan/22		Feb/22			Dec/21		Jan/22		Feb/22
India (total)		113		111		107			67.3%		68.8%		69.7%			12.3%		11.1%		10.2%
Pakistan		79		81		83			99.7%		99.7%		99.7%			0.2%		0.2%		0.2%
Sri Lanka		8		8		8			87.2%		85.3%		85.9%			3.6%		3.9%		4.1%
Philippines		47		46		47			95.7%		94.9%		95.7%			2.3%		2.0%		1.9%
Myanmar		20		21		21			97.8%		64.3%		58.5%			0.6%		1.0%		22.7%
Ghana		49		46		44			99.3%		99.2%		99.3%			0.2%		0.3%		0.2%
Nigeria		40		37		37			92.7%		90.9%		90.6%			2.8%		3.4%		3.6%
Sierra Leone		7		7		7			87.4%		72.3%		71.1%			5.6%		6.5%		7.1%
Kenya		17		17		18			98.6%		98.6%		98.6%			0.5%		0.5%		0.6%
Uganda		10		10		10			89.8%		90.7%		91.7%			3.1%		1.9%		0.9%
Tanzania		35		36		37			99.1%		99.1%		99.1%			0.2%		0.2%		0.1%
Rwanda		3		3		3			92.9%		92.6%		92.4%			2.6%		3.0%		3.2%
Zambia		2		2		2			98.2%		98.2%		97.7%			0.5%		0.5%		0.8%
Group		429		425		424			89.1%		87.5%		87.7%			4.1%		3.8%		4.6%
	PAR>30							PAR>90							PAR>180
	Dec/21		Jan/22		Feb/22			Dec/21		Jan/22		Feb/22			Dec/21		Jan/22		Feb/22
India (total)	22.8%		19.3%		17.1%			14.1%		11.6%		9.9%			10.5%		8.2%		6.9%
Pakistan	0.2%		0.2%		0.2%			0.2%		0.2%		0.1%			0.0%		0.0%		0.0%
Sri Lanka	6.0%		6.6%		6.9%			4.0%		4.0%		4.3%			2.5%		2.8%		2.8%
Philippines	2.5%		2.5%		2.7%			1.5%		1.9%		2.0%			0.3%		0.6%		0.8%
Myanmar	1.1%		1.6%		23.3%			0.7%		1.0%		0.9%			0.5%		0.6%		0.5%
Ghana	0.3%		0.3%		0.3%			0.2%		0.2%		0.2%			0.1%		0.1%		0.1%
Nigeria	4.6%		5.4%		5.8%			3.1%		3.6%		3.8%			1.8%		2.0%		2.2%
Sierra Leone	7.5%		8.7%		9.5%			4.0%		5.5%		6.2%			1.9%		2.2%		2.4%
Kenya	1.1%		1.0%		1.1%			0.8%		0.8%		0.8%			0.5%		0.5%		0.5%
Uganda	3.8%		2.9%		2.4%			3.4%		2.8%		2.3%			0.7%		0.9%		1.4%
Tanzania	0.5%		0.4%		0.4%			0.4%		0.4%		0.3%			0.3%		0.3%		0.3%
Rwanda	4.5%		4.8%		5.1%			3.2%		3.2%		3.3%			1.9%		1.8%		1.9%
Zambia	0.7%		0.8%		1.1%			0.5%		0.5%		0.5%			0.2%		0.2%		0.3%
Group	7.3%		6.4%		6.8%			4.6%		4.0%		3.5%			3.1%		2.6%		2.2%
(5)  Gross OLP includes the off-book BC and DA model, excluding interest receivable and before deducting ECL provisions and modification loss. (6)  PAR>x is the percentage of outstanding customer loans with at least one instalment payment overdue x days, excluding loans more than 365 days overdue, to Gross OLP including off-book loans. Loans overdue more than 365 days now comprise 3% of the Gross OLP. (7)  The table "PAR>30 less PAR>180" shows the percentage of outstanding client loans with a PAR greater than 30 days, less those loans which have been fully provided for.

· PAR>30 for the Group slightly increased to 6.8%, primarily due to the portfolio deterioration in Myanmar as moratoriums were no longer provided to clients with overdue loan payments.

· PAR>30 for Sierra Leone increased to 9.5% due to the increased OLP/client.

· Credit exposure of the India off-book BC portfolio of USD 33.7m is capped at 5%. The included off-book DA portfolio of USD 1.7m has no credit exposure.

Disbursements vs collections of loans until 28 February 2022 ⁽⁸⁾

Countries	Sep/21	Oct/21	Nov/21	Dec/21	Jan/22	Feb/22
India	52%	39%	85%	88%	78%	65%
Pakistan	100%	100%	98%	100%	100%	96%
Sri Lanka	Nil(9)	86%	100%	113%	70%	115%
The Philippines	89%	90%	90%	81%	80%	93%
Myanmar	37%	73%	90%	95%	99%	99%
Ghana	120%	111%	114%	108%	74%	110%
Nigeria	110%	128%	134%	93%	71%	98%
Sierra Leone	124%	112%	112%	110%	97%	102%
Kenya	100%	96%	103%	55%	95%	101%
Uganda	109%	115%	121%	69%	81%	112%
Tanzania	100%	107%	109%	107%	114%	112%
Rwanda	102%	101%	105%	98%	65%	80%
Zambia	102%	110%	111%	109%	76%	80%
(8) Disbursements vs collections refers to actual loan disbursements made to clients divided by total amounts collected from clients in the period. (9) Disbursements vs collections for September is nil due the nationwide lockdowns.

· Disbursements as percentage of collections exceeded 100% in 6 countries. The decreasing percentage in India was primarily due to the strategic decision to reduce disbursements.

Development of Clients and Outstanding Loan Portfolio   until 28 February 2022

	Clients (in thousands)			Delta		Gross OLP (in USDm)			Delta
Countries	Feb/21	Jan/22	Feb/22	Feb/21-Feb/22	Jan/22-Feb/22	Feb/21	Jan/22	Feb/22	Feb/21-Feb/22 USD	Feb/21-Feb/22 CC (10)	Jan/22-Feb/22 USD
India	729	521	498	-32%	-4%	166	111	107	-35%	-34%	-3%
Pakistan	432	520	530	23%	2%	69	81	83	20%	34%	2%
Sri Lanka	56	52	52	-7%	0%	9	8	8	-10%	-7%	2%
The Philippines	313	290	295	-6%	2%	50	46	47	-7%	-2%	2%
Myanmar	128	112	111	-13%	-1%	30	21	21	-30%	-11%	1%
Ghana	154	158	161	4%	2%	44	46	44	-1%	16%	-5%
Nigeria	256	246	245	-4%	0%	32	37	37	16%	27%	-1%
Sierra Leone	38	43	43	12%	-2%	5	7	7	38%	59%	0%
Kenya	99	118	120	22%	2%	14	17	18	27%	32%	4%
Uganda	81	92	93	15%	2%	8	10	10	29%	25%	2%
Tanzania	129	179	185	44%	4%	22	36	37	64%	64%	3%
Rwanda	18	18	18	-1%	-1%	3	3	3	18%	22%	-1%
Zambia	6	15	16	145%	3%	0.6	2	2	280%	210%	2%
Total	2,439	2,364	2,368	-2.9%	0.1%	453	425	424	-7%	1%	-0.2%

⁽¹⁰⁾ Constant currency ('CC') implies conversion of local currency results to USD with the exchange rate from the beginning of the period.

· With the number of clients broadly stable at 2.4m, and the continuing strategic focus in India on only collections , Gross OLP   decreased to USD 424m (0.2% lower than in January 2022 and 7% lower than in February 2021).  

Selected moratoriums ⁽¹¹⁾ on loan repayments until 28 February 2022

	Clients under moratorium (in thousands)
Countries	Dec/21	Jan/22	Feb/22	As % of Total Clients
India	205	205	205	41%
Pakistan	0	0	0	0%
Sri Lanka	0	0	0	0%
The Philippines	0	0	0	0%
Myanmar	44	0	0	0%
Ghana	0	0	0	0%
Nigeria	0	0	0	0%
Sierra Leone	0	0	0	0%
Kenya	0	0	0	0%
Uganda	0	0	0	0%
Tanzania	0	0	0	0%
Rwanda	0	0	0	0%
Zambia	0	0	0	0%
Total	249	205	205	9%

	Moratorium amounts (USD thousands)
Countries	Dec/21	Jan/22	Feb/22	February Moratoriums as % of OLP	As % of Total Moratoriums
India	28,351	25,950	23,782	22%	100%
Pakistan	0	0	0	0%	0%
Sri Lanka	0	0	0	0%	0%
The Philippines	0	0	0	0%	0%
Myanmar	778	0	0	0%	0%
Ghana	0	0	0	0%	0%
Nigeria	0	0	0	0%	0%
Sierra Leone	0	0	0	0%	0%
Kenya	0	0	0	0%	0%
Uganda	0	0	0	0%	0%
Tanzania	0	0	0	0%	0%
Rwanda	0	0	0	0%	0%
Zambia	0	0	0	0%	0%
Total	29,129	25,950	23,782	6%	100%

⁽¹¹⁾ Moratoriums relate to clients who have received an extension for the payment of one or more loan instalments during the month.

· Moratoriums on loan repayments relate primarily to approximately 41% of clients in India, who accepted to benefit from the one-time debt restructuring scheme established by the RBI and confirmed in September 2021. See RBI Covid-19 Restructuring Guidelines .  

· The moratorium amount across the Group decreased to USD 23.8m, which represents 6 % of the Group's Gross OLP.

 

Key events in March 2022

· On 14 March 2022, the RBI announced new regulation for the microfinance sector in India, applicable to all banks, NBFC-MFIs and other participants in the microfinance sector. The Group's preliminary assessment is that this is a positive development for ASA India as it creates a level playing field in the microfinance sector. The key changes include the removal of the interest rate cap and margin cap, loans shall be collateral-free (also for banks providing microfinance loans), and lenders will be restricted to provide microfinance loans to clients up to a maximum of 50% of the client's household income. See Reserve Bank of India - Notifications (rbi.org.in)

· Other than the existing partial lockdown and curfews in Myanmar, the Company is not aware of any further restrictions implemented in its operating countries as a result of the emergence of the Omicron variant up until 17 March 2022.

Please note that, while the Company's operational performance appears to gradually normalize in most countries except for India and Myanmar, the risk of additional challenges to our operations should not be underestimated, due to (i) the still relatively high infection rates, (ii) the current lack of available vaccines as well as vaccine hesitancy in most of our operating countries, (iii) the risk of the introduction of more infectious Covid variants in our operating countries, and (iv) the associated disruption this may cause to the businesses of our clients.

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Enquiries:

ASA International Group plc

Investor Relations      [phone]

Véronique Schyns    [e-mail]

About ASA International Group plc

ASA International Group plc (ASAI: LN) 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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