Please start, Dirk.
Okay. Good morning and good afternoon. This is Dirk Brouwer, CEO of ASA International. I hope you can hear me. I just want to give you a quick update of our operational performance, financial performance over the last six months, first half of 2022. I'll take you to slide number 1. This is the highlights for the period. What we can say summarized is that we've seen substantial improvements in profits for the first half of 2022. This has been driven by some client growth, particularly in Pakistan and Tanzania, which was offset by actually quite substantial strengthening of our business in India, intentionally by the way, which brought the client growth actually effectively at 1%.
It was much higher, but substantial growth in two major markets, which also actually yields higher. Branches are up about 4%. We increased number of branches by about 93 during the period of the latest. We've seen pre-tax profits go up about 8%. That's year-to-date, annualized. Our net profits on an annualized basis year-to-date is up about 311%. We are actually really getting back to a level of profitability we're used to prior to COVID, you know, more like 2019. OLP is down a bit. That's primarily caused by the devaluation, particularly in the last couple of months up till June, in Ghana and Pakistan.
If you look at it on a constant currency basis, minus some shrinkage of our business in India, our OLP is up about 12%. PAR 30 is just a tiny bit above 5%. It's 5.1%. We expect that to come down further in the second half of the year. Our ECL expenses have come down substantially. As you may recall, they were the first half 2021, $22.1 million. For the full year of 2021, it was $37.5 million.
The business improvement is really, you can see, what we feel the necessity for making more expected credit loss expenses have come down substantially with the company gradually coming out of the whole COVID situation in most of the markets where we operate. From a capitalization point of view, we continue to be well capitalized and maintain actually at this point, about $91 million of unrestricted cash. This slide is the overview of the financial metrics. I don't have to go through everything again because I summarized it already for you. The average gross OLP per client is basically down a little bit.
It has to do primarily due to the devaluation of the currencies in Ghana and Pakistan in the first half of 2022. Ghana is down actually from a currency point of view, about 30%. Pakistan actually about 16%. That has impact on our business, and it will also continue to have impact on our business or at least the financials for the second half of 2022. We can talk about it later if any questions about this, what this all means. The cost income ratio, as you can see, has also improved substantially, to about 66%, as mentioned before, for 85% first half 2021. ROA is substantially up.
They're up about 4.6%. ROE is up 25.5%. Now, if you compare that to the year 2019, which was the full year prior to COVID, prior to the start of COVID, our ROAs were about 76.7% and our ROEs were about 34.7%. We still have a way to go to get to the levels where we were used to prior to COVID. Clearly we feel that we're going now in the right direction with COVID getting more under control in almost all operating markets where we have our businesses. This is all reflected in the profit before tax. Profit before tax is up.
It's $23.8 million, which is year-to-date change is about 86%. If you look at it, for 2019, it was $54.3 million. Again, a lot. Still some work to do, but it is actually, it's going all in the right direction. Same applies with the net profit. You know, for the first half 2022, it's about $31 million, 13.1%. The full year period for 2019 was 13.4%. We're feeling that we're getting all in the right direction and making a big improvements with COVID now gradually getting out of the way from an operational perspective.
The final point I would probably make is that you see their total assets come down a bit, and that has primarily to do with the reduction of our asset base in India. Okay. Now I'd like to hand it over to Tanwir.
We're gonna talk about movements in our yield, cost of funding and margin next. This period we have seen a slight increase both in margin and yield. The main reason being we had higher disbursements in countries with higher yield. Basically, the percentage will be on those countries were higher. Cost of funding remained broadly stable. We saw that, you know, there has been a benchmark, you know, increase in the interest rates that's gonna come out in the later part of this year. On the funding profile side, basically, we kept the same mix. We do see a downtrend there, but that's mainly because of the FX devaluation. $85 million in fresh debt raised in this period. We remain well-capitalized.
$91 million unrestricted cash in the balance sheet, with a total of, you know, $154 million cash in the balance sheet. We do have a strong funding pipeline, $190 million fresh debt coming in. As you know, 50% of that is already in agreed terms. We did have an issue with the covenants this period, but we did manage to get $34.3 million of waivers after the half year. Most of it is coming from India because of PAR. We did take a hit in the equity, $17.7 million. That's why you see the book number more or less, you know, going down a little bit. Although we brought in $13.1 million, but we did take a hit for $17.7 million. With that, I pass it over to Karin Kersten.
Thank you, Tanwir. My name is Karin Kersten, Executive Director and in charge of Corporate Development as well. I would like to go to the business update, and the collection efficiency of our portfolio. In line with the highlights Dirk already gave, if you look to our collection efficiencies, if you look to the numbers, then we are mostly back to pre-COVID collection efficiency rates between 97% and 100%. There are a few exceptions, one of which is India. Compared to our lastly published figures in May, we have a slight improvement to 84%.
Also, if you look to India and you look at the way of calculation of the collection efficiency in the local market, they also take into account the overdue collection and in their denominator as a percentage of regular realizable collections and advance payments. If you look at that number, then we are at 101% collection efficiency. If you look to Sri Lanka, obviously because of the political situation in the country, the collection efficiency is lower at 88%. Myanmar, also because of the political situation in the country, as well as some lockdowns and COVID restrictions there, as one of the longest compared to all the countries where we are active in, is at 84%.
Nigeria, Sierra Leone are slightly below because the credit portfolio is a bit up there if you look to, for example, in Nigeria to the average loan size per customer, which has increased. If we go to the business update figures to the loan portfolio quality. Well, what's important to mention here is that if you remember to our 2021 results, India, the performance in India and the loss in India made a big impact on our yearly results. Since then, we have a deliberate strategy to reduce the portfolio there. You can see in terms of OLB that since the end of last year, we have decreased the portfolio from $130 million- $66 million at the end of August, which is a significant decrease.
If you look to the PAR 30 for the group and for business update figures that's including the off-book portfolio in India. We have improved our PAR 30 from 7.3% in December 2021 to 6.5% in August. Also here, if you compare country by country and look at the PAR over 30 and less than 180 days, you see India, Sri Lanka and Myanmar standing out there for the same reasons as elaborated on in the prior page. If we go to the regulatory updates. There are some developments. In India, in March of this year, the RBI has announced new regulations.
What is good for the MFI sector is that the interest rate cap and the margin cap have been removed, which make that we can raise our interest rates to the clients. Also, in looking to the MFI credits, will not only look at the clients, but at the client's household income, which is a broadening. Other conditions have improved in India. If we go to Pakistan, just before summer, we received a letter from the State Bank of Pakistan for our microfinance banking license, which allows us to also offer deposits, payments. They have put certain requirements in their letter to us, of which implementing our new core banking system is one of the requirements which we are working on now.
In Sri Lanka, the maximum interest rate cap has been relieved, so we can raise our interest rates to clients. In Myanmar, because of the situation in the country, there are some restrictions on repaying international lenders. We can't pay back the loans from international lenders there, which allows us to disburse a little bit more to clients if we wish. In Tanzania and Kenya, which are interesting markets in terms of our digital financial services strategy, we are in preparation for our application to get a deposit-taking license, which will be submitted to the central banks of Tanzania and Kenya.
Once we will be able to receive a deposit from the public, it will also reduce our cost of funding in those markets. If we go to our strategy, we would like to go for sustainable growth and increase financial inclusion. Our purpose is to reduce poverty. We have three key lines for our five-year strategy. One is to increase our financial inclusion, and this is the growth strategy by which we want to increase our number of branches, number of clients, increase the loan volumes, also grow revenues from payments and deposits and look at new countries.
If you remember back the percentage of growth, if you would make the percentage on our first page of the presentation in constant currency and exclude India, you saw that our portfolio indeed is growing double digits. The second priority in our strategy is the digital channel adding. It's on top of the branch model, so we will not be replacing the branch network or the group meetings we have, but add on a digital channel and introduce that via smartphone device. We want to enrich our high touch service and keep the face-to-face channel. Thirdly, we would like to broaden our products and services.
We want to continue to grow the loan portfolio, but on top of that, offer online loans, payments, deposits, and add value-added services by launching a platform which connects our clients to their suppliers. By this platform, our clients could place their orders for buying their stocks. We would allow them to buy their goods via this easy platform. We also would like to attract new clients, especially via the supplier marketplace, but also by offering deposits from the public. Some of these items on the strategy are shaded, and every shaded item has to do with our digital strategy. This is just to emphasize how important the digital strategy is going forward.
If we look at the process of digitization, our progress so far is on the three key elements. The most important is that we want to launch our digital financial services app. That's the new channel by which we will offer full financial services experience to our clients. Secondly, we are building this platform. It's a supplier marketplace platform. It's a digital platform, which would allow clients to grow their business. They would not have to close their shop to do their logistics and buying. They could get more attractive prices because of bundling the volumes and the stock will be delivered at their doorstep. Thirdly, we need to install a core banking system.
We currently have a lending system called AMBS, and we want to add a core banking system from Temenos, the T24 Financial Inclusion Suite. We are currently implementing that in Ghana and Pakistan. The timeline that we are currently working on the implementation of this core banking system. A key point for Pakistan is to get all the hardware delivered. In Ghana, we're also working on the communication to the central bank to get approval on this new system.
The first launch is expected this year, at the end of this year in Ghana for our supplier marketplace. The digital financial services and the launch of our core banking system is expected to go live in the second half of next year. Compared to the prior plannings we've given, the change here is that we now have an integrated planning in which we know what it takes to get all the hardware delivery and to link the different systems. For example, our current AMBS system via APIs to the new systems. The planning and timelines you see now is an integrated planning. I would like to give back to Dirk.
Thank you. Okay, I'll just want to quickly give a summary on the outlook for 2022. As mentioned, our operational financial performance continued to improve with substantial OLP growth and high portfolio quality in most markets. This has led to pre-tax profit increasing from $7.5 million- $23.8 million as mentioned. Just a quick summary. Almost all our operating countries grew their OLP in constant currency terms. We maintained high portfolio quality in most countries, and those countries made also a positive contribution to the group's profitability. The challenges we still face are in India, but the challenge in India is getting smaller for the simple reason that actually we're reducing the size of the business quite substantially, as you have seen in the numbers.
The other challenge we face in Myanmar, already mentioned, it's a complex environment currently with the military takeover. It has basically been a more challenging business for our clients to do their business, and as a result, it's more challenging also for us who service these clients. Sri Lanka, probably everyone knows, has been in real trouble. They're effectively, I would say, well, bankrupt is probably not exactly the right word, but it looks like it. They're waiting for a substantial recapitalization of the country by the IMF, and that's ongoing. That might help them for Sri Lanka to gradually recover their economy.
We've seen high OLP growth, Pakistan mentioned, Philippines and Ghana, but this has been tempered by such as the substantial currency depreciation in two of those markets. Mentioned already, Pakistan and Philippines as well as Ghana, down by substantial percentages. That's contributed to the decrease of our group OLP in U.S. dollar terms. I would also like to state that that is important to know because it also means this has all happened in the first half, but the impact will also take place in the second half of this year and potentially also for next year. It will have some further impact on the dollar terms of portfolio performance over the next, you know, couple of periods.
Portfolio quality otherwise improved substantially across pretty much all markets, and if not improved, then stabilized. We reduced our credit losses by a very substantial amount. It's from $1.9 million, and it came in fiscal year 2021, where it was $37.5 million. Now, keep in mind, as you probably all know, most of those provisions were made in India, and that is now really gradually stabilizing and also benefiting from the fact that this portfolio is shrunk substantially as well. That's an important point to make. I think on the outlook side, we've seen positive developments during the first half of 2022.
We also expect that our operating performance, you know, in terms of OLP growth and portfolio quality, will continue to improve. As mentioned before, the impact of inflation and the related foreign exchange movements are expected to continue to dampen the financial performance in U.S. dollar terms in the second half of 2022. It's very difficult for us to really estimate what the impact is gonna be. We just have to see a little bit how the markets, the currency markets are gonna move over the next coming months. That it will have an impact, we're quite, you know, we're unfortunately quite confident about. Dividend policy, important for many of our shareholders.
Based on the performance of 2022, this you know this current half year and the performance this year, we expect for the full year we considered whether we should start basically providing a dividend again to our shareholders. With the new developments, with the big currency movements, we've decided that we do not want to declare a dividend yet for the period to in 2022. We do expect to return to our pre-COVID 30% dividend policy in 2023. This of course assuming that the operation and financial performance of our company continue to improve. We will evaluate it very carefully throughout the next year if and when we should reinstate our previous dividend policy of 30%. I think this completes the presentation, and we're now open for questions.
Okay. Thank you, Dirk. We have a couple of questions. The first one, Dirk, I think this question is for you. What is your strategy and expectation for the business in India? You are downsizing to which turning point?
Yeah. I think we want to ensure that the business stabilizes. We felt that, you know, for us to recapitalize it now, where we still have a substantial amount of debt, will not help the business that much because some of our lenders would like to get repaid some of their loans early, some of them as soon as possible, effectively. That wouldn't really help the business that much. We have basically taken the strategy that we should work very hard to downsize the business and effectively by reducing the portfolio in two ways. One, by actually collecting from existing clients more than actually what we disperse.
We actually generate a lot of cash flow in the company, which we can then use to reduce the size of the portfolio. This will help us and enable us to reduce the leverage of the business. Secondly, we also have increased the number of BC, Business Correspondent portfolios over the last couple of months. That also means that part of the portfolio goes from our own book to the business correspondent books, which again frees up cash, which enable us to decrease the amount of debt which the company currently has.
Now we think that this will basically stabilize the business without much pressure for, from our lenders to kind of reduce it, by them. We take basically the steps ourselves. Once the situation is stabilized, we will carefully evaluate based on the new regime, with no interest rate caps and no margin caps, what's the actual economic proposition is for our business in India. We are relatively confident that with the new regime, with no margin caps and no interest rate caps, and the interest rates by us, but also by most of our competitors in the region, having increased already by about 2.5%, 3.5%, that actually the economics of our business in India will improve.
We would hope that, based on that, once we've seen that's really taking place in action, that we may be able to start rebuilding the business, once it has fully stabilized. We expect to see take place you know, throughout the remaining part of this year and probably also throughout the bulk of next year, I would say. Depends a little bit how quickly it will go. We'll make our decisions what further investments the group will make in our Indian operations.
Okay. Thank you. Another one for you, Dirk. In your strategy, you mentioned greenfield branches in new countries. What new countries are you thinking about, and how big do you expect the operations to be in these new countries related to your current footprint by 2025?
Yeah. I think we are looking at various countries. I'm not gonna say exactly which ones, but they're all pretty much in Africa. There's not a lot of countries where we can still go in Asia. Just from a regulatory perspective, it's very difficult. You know, we'll restart the evaluation of some of those countries which we had in mind already pre-COVID. We're actually dusting off our files on these countries to try to evaluate what the current situation is in these countries and whether it makes sense to make a small greenfield or start a small greenfield in each of those countries.
I mean, obviously we still have a lot of work to do with our existing portfolio. It's not the highest priority, but we will send off or send some teams of people to evaluate some of these countries, and some of them we've already evaluated in the past, but we need to just update them. That is probably gonna take place throughout the remainder of this year and also next year.
Thank you. Karin, can you comment on the impact of inflation on the business? Yes. There are three types of impact. To start with, the most important one is how does inflation impact the business of our clients? If you look to the operational activities of our clients and their businesses, what you see is that they will have to buy goods for higher prices, but they also have the tendency to raise the prices they charge to their clients. If you look to the performance and the businesses of our clients, the impact of inflation is not that big, which is good news for our credit and loan portfolio. If you look to the effect of inflation to ASA Group, then there are two impacts.
If you look to inflation, the largest inflation has taken place in the last half year in Sri Lanka, where depreciation was 77%. The largest one was Ghana, with a deflation of 30%, and Pakistan with 16%. Well, these high numbers apply to our large size countries by coincidence. Both Pakistan and Ghana are large operations and profitable operations. The currency depreciation will run through our equity via a translation loss reserve. That's where Tanwir commented on the equity which was not going up although we had a profit, and that's because we had to book off in this translation loss reserve.
The third impact of inflation is if we take up dividends from the different countries, operating countries to the group, and then the profits in local currencies, but the group figures are in dollars. What we see is that the profits generated in the countries will shrink in dollar terms, so that's the third impact. In short, the operations of the clients not big influence. There is an impact on the equity via the reserve. Thirdly, profits when they are transferred to the group, they are less in dollar denomination.
Maybe I should add to that. Obviously, we have an inflationary environment in many countries ever since the start of ASA International. Ghana is actually a very interesting example. We've been in Ghana since 2008. We've seen actually we've operated in a fairly inflationary environment in Ghana for many years. We've seen really in action in that country that the clients needed bigger and bigger loans. Once they buy, they get a loan, they buy goods for their shops, they restock their shops. During the period of restocking, actually, they can make bigger margins because they buy in before they sell. They're generally already increasing the prices based on the market prices of many of the goods in an inflationary environment, so generally go up.
Once they are restocked, i.e., by selling most of the goods, they need to generally get bigger loans to restock their shop to the same level. What we've generally seen in an inflationary environment that clients' needs for bigger loans increases. They sell basically at, you know, similar, say, 20% margins. Also their incomes increase, and it enables them to ask for bigger loans, but also to manage those loans without having to default on these loans. Generally, that's a process which can go on for years. What we do see, though, the portfolio, say in Ghana, grows up quite substantially. Profits go up as well.
If you then bring it back to U.S. dollars, that's, you know, it might roughly stay the same. In certain situations, you see better profitability, sometimes slightly less profitability. They go a little bit hand in hand. It's, you know, it varies a bit per year, but you generally do not have as much negative impact from inflation because of the short-term business we provide or the short-term loans which we provide to these clients which have high turnover as well. The stock they have is high turnover as well. The impact for the operations of our clients and as a result of, for us as a group of our business, in each of those countries where this happens, is less than you would generally expect.
Thank you. Karin, another question for you. Can you comment on the impact of the flooding in Pakistan? Yeah. If you look to the flooding in Pakistan then, of course there is a big impact to the country as a whole. The UN and the government of Pakistan have launched the 2022 Pakistan Floods Response Plan, indicated that this is not a normal situation of flooding in Pakistan. If you look to our own footprint vis-à-vis where the floodings are, then the regions mostly impacted are not the regions where we are active. There are three branches of us which have been damaged by the floodings directly, so physically. The direct impact is not that significant.
Having said that, of course, we do have impact because the whole infrastructure has been damaged and so the whole transport, et cetera, and rural areas have been affected. If you look to our expectations, we would expect our core levels to go up. If things normalize, we would expect them to be below 1% by year-end. Thank you. Tanwir, it would be useful to have some commentary on the extent to which local currency borrowings mitigate exchange rate exposure.
Yes. Local currency is always good. You do want to borrow in local currency. Locally, if you borrow in dollars, you know, you do have to hedge, and that's, you know, hedging cost is going, you know, off the roof right now. The direction we have taken, if you look at our total debt, 70%, you know, debts are in local currency right now, so that's a good direction. It's also true that, you know, there is a fine line. It really depends which country, you know, you're taking that debt and, you know, what's the situation in that particular country.
Thank you. Another question for you, Tanwir. Can you explain how the cost of funding will evolve in the second half of 2022?
Yes. I touched upon that a little. The benchmark rates have all gone up. In the first half, we were still using, you know, some of the December rates. Second half, you know, we'll be using the you know June rates. I suspect and expect that, you know, that will put additional costing there. Cost of fund is going up.
Thank you. Now, related to the funding costs, can you give an estimate for the potential impact of the deposit-taking licenses in Tanzania and Kenya? Can the licenses lower your funding costs materially?
Yeah. It's, you know, always true when you get deposits and if you can utilize that deposit locally, that, you know, helps your cost of funding. At this time, we don't have an exact estimate on those.
Neither on timing when those deposit-taking licenses are granted.
Thank you. Karin, how has your digital app pilot been progressing? What is ASA learning, both good and bad? Now that ECLs are down to $2 million for the half year, do you expect them to remain near these levels going forward? Well, it's too early to say that because there is no pilot yet. Before we can start launching our digital financial services app, we also need to install the core banking system, because the data need to feed from the one to the other. Implementing a core banking system really is a big program. That's not expected to be implemented before summer 2023. We expect the implementation also the starting testing of DFS only after summer. What we do see is when we are visiting some of the client groups, we are already talking about the digital app, and so testing our appetite.
What we do see is that we expect some phasing in the digital financial services, that clients who have a little bit larger enterprise will be more digitized and having a smartphone access than the really very small loan clients. We see quite some appetite and enthusiasm on us explaining that we want to go digitally. The fact that we do not want to replace the channel does give us, like, on the one hand, the strength of our model of being really close and in the vicinity of our clients, which helps our credit quality of the portfolio. On the other hand, by going digital, we also can have the benefit of that reach.
We might enter some direct debit possibilities for paying installments. We do hope that adding that will also help our ECL by having the one and the other channel. Let's see when we launch it, how the first results are. We will be able to see some results at the end of the year or beginning of next year of our supplier marketplace, but that will not at that moment be linked and attached to our digital financial services.
We could see already how the digital appetite of our clients is, and that could also be a marker for the appetite of DFS later on. All right. Thank you. We have a couple of questions about the dividend, Dirk. Can you explain why the board have decided not to declare a dividend already for the full year? We are only at half year. And what is your view about 2023? What is different, what will be different in 2023 versus 2022?
Yeah. Well, it has to do a lot with the currency movements, and the impact it has on particularly two of our bigger markets, which is Pakistan and obviously Ghana, where we've seen substantial currency depreciation. We just want to ensure that you know that we are well positioned to deal with debt. You know the distribution of dividends is obviously a welcome step by most of our investors. I would also say that it's also important that you know we're coming out a fairly complex scenario with COVID. You know the current scenario with these high levels of inflation and in many countries actually quite relatively unprecedented levels of inflation.
We think that we just need to be a little bit more careful and, before we actually make the decision, that we're gonna reinstate the dividend. The dividend we pay actually weakens our balance sheet a bit. That's generally not a good big problem, particularly if we make good profits. You know, we just wanna be a bit cautious with all the uncertainty now caused because of the Ukraine situation, the impact it has on actually food markets, the higher, much higher cost of oil and gas, which also affects some of our clients in the countries where we operate. We just want to be cautious instead of making a promise now that we're gonna reinstate it. We are just gonna evaluate it, but with the intention, as soon as we feel comfortable that the business is all on the right track, and we can manage the new environment, that we will try to reinstate that as soon as reasonably possible.
Thank you. Can you also comment on the question, to what extent have you had any difficulty exchanging or repatriating currency from your markets?
Yeah, that's also a valid question, and relates actually, it also somewhat answers the first question or the previous question I just answered. There's a general tendency when currencies go down, that central banks are gonna be more cautious with regards to funds being, you know, basically dividended upwards from local currency into dollars back to a parent company. What we see, what we experience now is very similar to many big companies who have subsidiaries in countries like, particularly, you know, one to call out is Nigeria, which has been traditionally very difficult over many years. Actually, Ghana has been generally very good. Also Ghana will be much more cautious.
We haven't submitted yet another dividend declaration, but we have done actually two in a fairly recent past, over the last two years. It worked out fine, but we just believe it's gonna be a little bit more difficult now also in Ghana. The same applies in Pakistan. Pakistan is slightly different also because we just received our license. As part of that license, we have made a commitment to make a capital injection in the company. Once we have done that, we can start to see if we can get dividend coming out. But we just have to see how that's gonna work. You know, normally all those things will require central bank approval.
We just have to see how this whole process will work. We have never taken a dividend out of Pakistan yet, we just have to see if the authorities, the State Bank of Pakistan, will be happy to approve that very quickly or that they will be slightly more reluctant to approve it because of the fact that their whole financial situation in Pakistan is not particularly stable at the moment with the big currency devaluation.
Thank you. Tanvir, are you going to be able to mitigate your increased cost of funding by passing through higher rates to customers? How difficult will that be? How quickly can you do that, if you would do that?
Yeah. We are thinking of, you know, introducing some product mix to mitigate this situation. That is still in the research stage.
I would add to that, I mean, as mentioned before, generally inflation requires for our clients' needs for bigger loans increases. When we provide same client a bigger loan, and that client actually has a sufficient amount of income to service that loan at the inflated rate, effectively, you know, they will pay us more interest over that period because of the fact that they have a bigger loan.
There's no extra cost for us, for our loan officers to service that or to have the client service that loan when it's a slightly bigger loan. Effectively, the impact for our business is not so big, although it creates much more volatility. You know, over a period of time, say it's 12 months, 24 months, 36 months, you generally see that inflationary environments will lead to bigger income streams for our business in that particular market, but then bringing it back into U.S. dollars can be just a little bit below or a little bit above in terms of profitability.
Yeah. What's good to mention is that if you look to our figures, and we do have a growth strategy, that operationally we do grow in the countries, and our loan size per client also does grow. The only thing is you do not see it in dollar terms. Also a good point to mention is that we grow the loan size after repayment of the loan. We are not increasing our risk appetite while doing it halfway. A client needs to pay off a loan, and then there are the certain amount of increases. Not during. Yeah. Thank you. I think the last question is again about dividend clear. Until which calendar year do you expect not to pay any dividend? And on which year's profit is it based? We need to be clear on that. Is it based on 2023 profit? Is it then not going to be paid until year 2024?
Yeah, I mean, I'm sorry that we're not extremely clear about it. I can tell you that we've had a discussion about dividends actually before June this year, and with the intention to reinstate the dividend policy. With all the havoc in the markets, where we're seeing this big currency depreciation, we said, "Look, it would be a little too aggressive to actually now," and may weaken the balance sheet essentially. It's not about large sums, essentially, also the dividend, but it may weaken the balance sheet a bit.
Since we have all this uncertainty with the high amount of devaluation in some of the bigger markets where we are, as a result of the increased inflation, and also some restrictions we anticipate from some of these subsidiaries which make generally good profits and related to their ability to distribute it to the holding. We've decided, let's be a bit more cautious and see how the situation develops over the next 6-12 months.
If the situation improves, then we would be very keen to reinstate the previous dividend policy we've had. If the situation unfortunately would not improve, then we may have to delay it to a little longer. I really don't feel sufficiently confident to inform our shareholders now that we will reinstate it over the next 6-12 months. It will be our intention to, if we feel it's in the company's and therefore also in the shareholders' interest to do so.
Thank you. There are no further questions currently. Dirk, could you proceed with your closing remarks?
Yeah. Well, thank you so much for taking the time to listen to our updates, our business updates. I appreciate your support with our company over, for many of you, for many years. We are working very hard to improve our business. We're coming out of complex situations, as you all know, with COVID. We would have liked to been able to tell you, "Well, now we're gonna be back to where we were before, and we start growing from there to much higher levels." Now we just have to face the fact that the situation has changed a bit with high levels of inflation in many of our operating markets and the impact it's gonna have in the short term on our businesses.
I hope that all our shareholders will continue to be a bit more patient with us. We do whatever we can to get the business in good shape again and have the levels of annual earnings growth at pre-COVID levels again, which should be in the interest of the company and clearly then also in the interest of our shareholders. Thank you very much.