Blue Enjoys Good Growth in Continent

Johannesburg, Sep 01, 2009 (Business Day/All Africa Global Media via COMTEX) -- BFNLF | Quote | Chart | News | PowerRating -- PAN-African micro-financier Blue Financial Services continues to enjoy good growth prospects in all the 14 African countries in which it operates.

The fast-growing AltX-listed group, whose loan book rose 200% to R1,44bn in the year to February and whose earnings increased 92% to R119m, said its entry into Nigeria specifically, the second-biggest economy on the continent, was beginning to show healthy growth.

Nigerian banks have been rocked by central bank interventions in recent weeks to maintain the stability and improve transparency, but Blue does not expect its operations will be affected. It does not anticipate acquisitions in the near term, but the long-term aim is to expand into all viable markets in Africa, where 300-million people are estimated to require financial services and credit.

"Prospects for the second half of the new financial year are encouraging," chairman and CEO Dave van Niekerk said yesterday in the annual report. He said the group could take on much more debt to grow the return to shareholders, but equity to grow the debtors' book would only be issued if debt was unable to be obtained.

Blue remains reliant on sustainable and predictable funding lines, which have been negatively affected by the loss of liquidity as a result of the global financial crisis, but new sources of funding were being identified while existing funding relationships were being built upon.

"The group will focus on driving organic growth and operational efficiencies in order to extract value from its current operations whilst exercising prudence in any other expansion opportunity."

The only post-balance sheet event was that "Blue has successfully hedged a 10m lending facility ". The group implemented a hedging strategy to reduce its exposure to foreign exchange and minimis e the effect on earnings after it incurred losses of R47m last year, mainly on dollar loans that were not hedged.

The acquisition of Credit U in SA, which involved an additional 90 branches in SA and 600 more staff, had been integrated, providing a wider distribution model and footprint to capitalise on opportunities in the South African market.

In the financial year to February , the group grew the number of its branches to 314 from 171 the previous year, while its staff increased to 3000 from 1500.

Blue was planning a dual listing following its dual listing in Botswana in May.

It has a credible group of big shareholders, including Absa , which recently increased its stake to 21,5% from 16%, Stanlib, American Insurance Group and the International Finance Corporation.

During the past financial year capital inflows into Africa were affected by the global crisis.

"This is, however, a temporary effect and Africa will most certainly recover. Without a doubt the forecasted growth for Africa, if you were to consider it a single country, would be ahead of that of Brazil, Russia and India," said Van Niekerk.

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