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MyCredit Investments Ltd. (FairMoney or the Company) has capitulated to huge impairment charges on financial assets which ate up 82 percent of its net interest income, while rising operating expenses was the last straw that tipped the company into a loss position.
FairMoney Nigeria, a digital bank sprawling like mushrooms across the country with a view to provide financial services to the young unbanked population through latest technology, posted a loss after tax of N3.73 billion (Group) as at December 2022 from a profit position of N1.612 billion for the Group as at December 2021.
The net loss was largely driven by a N45.37 billion impairment charge on financial assets that represents a 159 percent increase from 2021’s N17.5 billion.
The impairment charge of N45.37 billion (Group) swallowed up 82% of its Net Interest Income of N55.07 billion, leading to net interest income after impairment of N9.69 billion.
Also, total operating expenses of the firm rose 81.4 percent to N13.88 billion in 2022 (compared to N7.648 billion in 2021) and this was equivalent to 1.42 times operating income.
While an exceptional item has dented the bottom line, performances at the top line was impressive as interest income increased by 103.3 percent to N60.56 billion in December 2022 from N29.78 billion as at December 2021.
FairMoney Nigeria had earlier obtained investment-grade ratings, BBB (NG) Long Term, and A3 (NG) Short Term with a stable outlook by Global Credit Rating (GCR). The assigned ratings were driven by FairMoney’s ungeared position, robust liquidity, resilient balance sheet, sound underwriting practices, and a strong growth trajectory since its inception.
This stable outlook rating reflects GCR’s expectation that MyCredit Investments Ltd. is evolving and will show strong overall performance metrics over the medium term. GCR further noted that cash flow and leverage was a positive rating factor and business growth is expected to remain steady over the next 12-18 months.
Commenting on the ratings, Co-Founder & CEO of FairMoney, Laurin Hainy, affirmed that the ratings reflect FairMoney’s resilient business model, international best practices, strong management team and a diversified employee base.
“The milestones achieved since our incorporation within the digital banking space indicates that the Group is on track to achieving its vision of building the leading Neo-bank in emerging markets,” he stated.
Corrections : An earlier version of this article stated that FairMoney: “posted a loss after tax of N3.74 billion as at December 2022 from a loss position of N3.76 billion as at December 2021” – this has been corrected to show that the Company did not make a loss in 2021.