Harare - Micro-finance firm Untu Capital’s profit for the half year ended June 30 2018 went up by 36 percent to $223 681 from $164 777 recorded in the same period last year buoyed by a strong growth in its loan book.
The company said the growth was largely disciplined and the organisation underwrote a number of big ticket size SME loans.
“The loan portfolio closed the period $6 445 373, 59 percent up from $4 041 386 as ta December 31 2017.
“The interest income went up by 55 percent compared to the same period last year due to loan portfolio growth realised during the period under review.
“Interest expenses grew by 139 percent to close at $327 407 from $91 285 in FY17 due to increased borrowings of $2 851 225. $219 345 was realised as other income from fair value adjustments in respect of transfers made from Property and Equipment to Investment Property.”
In the period under review, the Company also recorded an impairment expense of $227 868 which increased from the prior year comparative due to the first time adoption of IFRS 9.
Operating expenses went up 16 percent from $1 009 609 to $1 166 679 because of increased operational activity during the year compared to the prior year.
Untu said despite the increase in costs, Management instituted a number of cost containment measures as well as utilising the level of operating leverage in the business as evident in the cost to income ratio closing the period at 63 percent down from 74 percent attained during the same period last year.
During the period under review, Property and Equipment went down because of transfers made to Investment Property in respect of leased out properties.
Additionally, the Company’s borrowings grew by 78 percent from December 2017 with 77 percent of the balance funds from Medium Term Note Programme.
Untu said the Portfolio At Risk 30 day which measures loans outstanding at the end of the reporting period that have one or more instalments of principal past due for more than 30 day closed the period at 4.8 percent down from 5.8 percent reported at the end of 2017.
“This was a result of extensive efforts made by the Company in ensuring strict credit underwriting skills and robust credit risk management strategies. These have been instrumental in maintaining a quality book in a very risk environment.
Going forward, the Company said it expects its interest income to rise in the second half of 2018 due to an increased lending activity.
It said Management will continue to manage costs aggressively and also optimise it margins in the last half of 2018.
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