South African credit-only micro-finance institution Real People Investments Holdings has reported a 16.8 per cent increase in loss after tax in the six-month period to September 2017 compared to the same period last year.
The net loss stood at Sh232 million for the half year ending September 30 compared to a loss of Sh199 million reported in the same period during the last financial year.
The micro-finance firm stated in a notice that they wrote off some old contracts, a move that cost Sh98 million and greatly contributed to the increase in the amount of loss recorded.
The firm also blamed the increased number of people defaulting on loans and the growth of impairment charges for the growing losses. The firm cited “poor operating environment” as the main reason for people defaulting.
“The financial half year results ended on a disappointing note for the company when compared to the same period last year. The company reported a loss after tax of Sh232 million. The loss was mainly attributable to a decision to impair all contracts in the oldest aging buckets, to nil. This resulted in a once –off adjustment to impairments of Sh98 million,” the company said in a statement.
The announcement comes in the wake of a negative rating from Global Credit Ratings (GCR) where the latter stated that the rating action primarily reflects a reduction in the company’s financial strength assessment.