October 19, 2022

Dolla Financial Services Limited (DOLLA) for the nine months ended September 30, 2022, reported a 213% increase in net interest income to $435.91 million (2021: $139.19 million). For the third quarter (Q3), net interest income closed at $164.15 million (2021: $53.62 million). Management noted “this increase was driven by the growth in our loan portfolio which positively reflected in both our balance sheet and interest income.”

Interest income for the period rose 170% year over year to $475.22 million (2021: $176.31 million), while interest expense amounted to $39.31 million (2021: $37.11 million). “The effective use of debt to drive growth in the loan book has impacted the movement in interest expense”, as per DOLLA.

Provision for Expected Credit Losses (ECL) for the period amount to $21.58 million (2021: $16.91 million). For Q3, Provision for ECL amounted to $13.68 million (2021: $7.61 million). Management noted that “the reduction in ECL is primarily due to the changes in the company’s loan portfolio, proactive management of delinquency and a deliberate effort in employing sound risk management to loans.”

As a result, net interest income after loan impairment for the nine months and Q3 amounted to $414.33 million (2021: $122.29 million) and $150.47 million (2021: $46 million) respectively.

Non-Interest income for the period:

• Fees and Other Income amounted to $5.91 million (2021: $40.52 million)
• Foreign Exchange Losses totalled $25,000 (2021: gains of $1.26 million)

Consequently, total net interest income and other revenue stood at $420.21 million (2021: $164.07 million), while for Q3, it stood at $152.39 million (2021: $66.15 million)

Administrative Expenses rose 103% year over year to $218.94 million (2021: $107.71 million). For Q3, it stood at $82.23 million (2021: $38.14 million). Management noted “the increase was primarily attributed to increased staff costs as we continue to build capacity to support the company’s growth. Other costs were associated with process improvements to better serve our customers.”

This resulted in profit before taxation of $201.27 million (2021: $56.35 million).

After accounting for taxation of $13.22 million (2021: $13.15 million), net profit for the nine months totalled $188.05 million, an increase of 335% compared to $43.20 million for the corresponding period of 2021. For the quarter, net profit closed at $70.15 million (2021: $22.37 million).

Total Comprehensive Income for the period was $179.36 million (2021: $41.18 million).

Earnings per share (EPS) for the nine months ended September 30, 2022 totalled $0.08 relative to $0.02 booked for the comparable period of 2021. For the quarter, EPS closed at $0.03 (2021: $0.01). The trailing twelve-month EPS amounted to $0.11. The number of shares used in our calculations amounted to 2,500,000,000 units. Notably, DOLLA stock price closed the trading period on October 18, 2022 at a price of $3.36 with a corresponding P/E ratio of 30.61 times.

Additionally, DOLLA has advised that “management has implemented several strategies to bolster collections to contain delinquency. These strategies will result in a reduction in the Company’s arrears balances in the short term.”

Balance Sheet at a glance:

As at September 30, 2022, the Company’s total asset base amounted to $1.36 billion (2021: $591.45 million). The increase was mainly due to ‘Loans, Net of Provision for Credit Losses’ which closed at $1.17 billion (2021: $519.31 million).

Equity attributable to stockholders of parent amounted to $715.46 billion (2021: $50.34 million) with book value per share amounting to $0.29 (2021: $0.02).

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