Asa Int Regulatory News (ASAI)

26 February 2019

ASA International Group plc

Year End Trading Update

ASA International Group plc, ("ASA International", the "Company" or the "Group"), one of the world's largest international microfinance institutions, today releases its trading update for the twelve-month period from 1 January 2018 to 31 December 2018 ("the period").

Key highlights for the period:

· Full year 2018 results to be in line with expectations

· Strong underlying operating performance across all segments

· Continued currency depreciation, particularly in Asia

· Quality of the Outstanding Loan Portfolio ("OLP") remained stable with PAR>30 at 0.6%, similar as in 2017

Dirk Brouwer, Chief Executive, commented:

"We delivered a strong underlying performance during 2018, driven by further growth in branch and client numbers across all our operating regions, and expect to continue doing so in 2019.

Whilst still early in the year, given the previously reported significant currency depreciation in some of the Company's major countries during the second half of 2018, 2019 US dollar earnings growth is expected to be materially below our medium-term target.

Over the medium term we continue to target earnings growth of 20-25% per annum in US dollars."

Regional performance during the period:

South Asia

· Number of clients grew to over 1mn, up by 17.6%

· Number of branches increased to 638, up by 22.5%

· Substantial currency depreciation in Pakistan (PKR down 26.1% against USD in 2018), India (down 9.0% against USD in 2018) and Sri Lanka (down 19.2% against USD in 2018). Loan growth in USD terms was muted for the year

· OLP (excluding the off-book IDFC portfolio in India) expanded to USD 176.6mn, up by 5.2% (up 21.0% on a constant currency basis)

· OLP including the IDFC portfolio increased by 14.9% to USD 213mn (up 31% on a constant currency basis)

· OLP/Client averaged USD 192 down by 4.7% (up 9.7% on a constant currency basis)

South East Asia

· Number of clients grew to over 442k, up by 9.0%

· Number of branches increased to 369, up by 13.5%

· OLP grew to USD 63.0mn, up by 17.9% (up 25.6% on a constant currency basis)

· Loan growth in the Philippines was ahead of expectations despite continued currency depreciation in the Philippines (PHP down 5.1% against USD in 2018) due to increased average OLP/client in the country

· Myanmar loan growth was lower than expected in both local and USD terms (MMK down 13.8% against USD in 2018). Due primarily to regulatory delays in approvals for opening new branches, adverse weather conditions and increased competition in certain regions

· OLP/Client averaged USD 142, up by 8.2% (up 15.3% on a constant currency basis)

West Africa

· Number of clients grew to over 435k, up by 11.7%

· Number of branches increased to 414, up by 15.6%

· OLP grew to USD 72.4mn, up by 24.0% (up 28.9% on a constant currency basis). This was higher than expected due to

o Lower than expected depreciation of operating currencies in all countries across the region relative to the USD in 2018 (Nigeria - NGN stable, Ghana - GHS down 7.3%, and Sierra Leone - SLL down 12.3%), and;

o Higher than expected OLP growth in all countries due to increased average OLP/client across the region

· OLP/Client averaged USD 166, up by 11% (up 15.3% on a constant currency basis)

East Africa

· Number of clients grew to over 242k, up by 50.8%

· Number of branches increased to 244, up by 33.3%

· OLP grew to USD 33.2mn, up by 62.1% (up 63.1% on a constant currency basis), which was higher than expected, due to continued expansion of operations in all countries across the region

· OLP/Client averaged USD 137, up by 7.5% (8.1% up on constant currency basis)

Impact of foreign exchange rates

During Q4 2018, the US dollar continued to strengthen more than expected against many of the company's Asian operating currencies, meaning that:

· Existing and future local currency earnings translate into less US dollar earnings

· Equity capital denominated in local currency translates into less US dollar capital

The weakening of these currencies against USD in 2018 is expected to dampen USD year-on-year OLP and OLP/Client growth, particularly during H1 2019.

Outlook

Operating performance is expected to be in line with medium term targets. Given the previously reported FX volatility, 2019 US dollar earnings growth is now expected to be materially below our medium-term target.

Over the medium term we continue to target earnings growth of 20-25% per annum in US dollars.

Notice of Full Year Results

As previously announced, the company will announce its 2018 Full Year Results on Tuesday 16 April 2019.

Enquiries:

ASA International Group plc +31 20 846 3554

Investor Relations vschyns@asa-international.com

Véronique Schyns

MHP Communications +44 20 3128 8540

Charlie Barker ASAInternational@mhpc.com 

Simon Hockridge

Patrick Hanrahan

Florence Mayo