LASCO Financial Services Limited (LFSL) faces a pivotal leadership transition as Managing Director Jacinth Hall-Tracey, instrumental in its 21-year evolution, steps down effective December 2025.

Her departure, announced on July 8 and framed as a “mutual agreement”, coincides with LFSL grappling with the aftermath of a costly microfinance expansion and embarking on a fundamental strategic shift away from its core informal sector lending.

Hall-Tracey, who rose from general manager to lead the company after co-piloting its growth alongside late founder Lascelles Chin, will transition to a consulting role. Newly appointed General Manager Sharlene Williams assumes co-leadership during a six-month handover.

The board lauded Hall-Tracey’s “invaluable service”, yet her exit underscores the scale of renewal required following a $712-million net loan loss at its microfinance subsidiary, LASCO Microfinance Limited (LASMF).

Foundations: Remittance Roots

LFSL’s origins reveal the irony of its current predicament. Founded in 2004 as a licensed cambio and remittance provider, it thrived by mastering Jamaica’s cash-based economy and vast diaspora. Under Executive Chairman Chin and Hall-Tracey (appointed post-2010 Jamaica Stock Exchange listing), it deployed a capital-light model, partnering with over 100 sub-agents — including pharmacies, supermarkets, and credit unions — to scale MoneyGram services.

This strategy propelled LFSL to become MoneyGram’s ‘Agent of the Year’ for Latin America & the Caribbean in 2009. A critical factor in its early profitability was its junior market listing on the JSE in 2010 after raising $58 million in an initial public offer (IPO), securing a five-year full income tax exemption followed by a 50 per cent charge reduction from 2015 to 2020.

A pivotal expansion occurred in 2012 when LFSL acquired rival Supreme Ventures’ remittance network, cementing its status as the Caribbean’s top receive agent.

Strategic Shift: Diversification and Microfinance Ambition

By 2015, margin compression in remittances and digital disruption forced a strategic pivot. Revenue growth slowed to 21.9 per cent in its 2016 financial year, down from 31 per cent compound annual growth rate (CAGR) 2011-2015, while banking “de-risking” threatened correspondent relationships. In response, LFSL started diverfying its products beyond remittances and cambio service.

Since 2010, it expanded its staff loans business to a consumer loans unit providing short-term unsecured loans and long-term secured loans for the general consumer market. In September 2015, it launched “a business loans unit to service the growing financing needs of Jamaican MSMEs”, securing a $100-million credit line from the Development Bank of Jamaica for onlending. Huawei phone distribution was also taken on to offset volatility, while the company accelerated digital adaptation, acknowledging technology’s role in “changing the delivery of financial services” in its 2016 annual report.

However, the defining — and ultimately riskiest — move came in November 2017. Hall-Tracey helped orchestrate LFSL’s $1.35 billion acquisition of Scotia Jamaica Microfinance (CrediScotia), including $824 million in goodwill reflecting expected synergies. Funded by a $1.5-billion bond at 9.5 per cent interest, the deal was a major wager on Jamaica’s informal economy, where greater than 40 per cent of firms faced financing constraints, according to a World Bank study.

Overnight, it turbocharged LFSL’s loan book by 380 per cent from $281 million to $1.35 billion, with 77 per cent of loans unsecured and targeting ‘unbanked’ nano-entrepreneurs such as school gate vendors, taxi operators and bar owners. The expansion included adding four branches to CrediScotia’s network, creating a 13-location powerhouse. Microfinance was positioned as the new growth engine amid stagnant national remittance flows.

Initially hailed as visionary, LFSL’s profit surged 35 per cent and its stock price rallied in 2018. Yet warning lights flashed immediately: loan loss provisions exploded 622 per cent to $114 million, with 8.5 per cent of loans impaired — far above Jamaica’s banking average of 5-7 per cent. This aggressive push occurred as the company’s valuable tax exemptions were expiring, leaving no margin for error as it faced the full 33.3 per cent corporate income tax rate from 2020 onwards.

Pandemic Unravelling and Financial Toll

The fragility of LASMF’s client base was catastrophically exposed by the COVID-19 pandemic. Lockdowns froze economic activity, triggering soaring defaults. Between March 2020 and March 2023, LASMF, formed by merging CrediScotia with LFSL’s existing microcredit business, wrote off $1.05 billion in loans, recovering just $338.7 million — a net loss of $712 million. The loan book imploded by 46 per cent to $1.01 billion by 2022. Staff plummeted from a peak of 214 in 2020 to 164 by 2022. LASMF swung to a $27-million loss in 2023 and an $88.9-million loss in 2025, dragging group net profit down to $58.6 million from $213.9 million in 2023.

“The pandemic had a significant impact on the ability of borrowers to honour their debt and significant provisions for loan loss reduced profitability,” Hall-Tracey stated in LFSL’s 2023 annual report. The $824-million goodwill premium became symbolic of a profound miscalculation of systemic risk within Jamaica’s informal sector.

Ricardo Thomas, LASMF assistant general manager, acknowledged the core vulnerability in a May 2025 interview: “We were heavily concentrated in the informal… They don’t have collateral. They don’t have records… and they’re vulnerable to everything.”

Restructuring Struggle and Strategic Pivot

In response to the crisis, LFSL initiated a painful restructuring. Hall-Tracey noted in the 2023 report: “Since 2020, several processes have been put in place to de-risk the business, which includes adjusting the targeting of our customers. We had a high concentration of microbusiness customers who are vulnerable to economic shocks. We have since reduced the exposure to this segment, thereby improving the quality of the portfolio. In 2022, we began pushing for growth of our portfolio and expect that this company will recover its profitability by the end of the 2024 financial year.”

However, that recovery proved elusive. The 2024 annual report admitted: “LASMF revenue and profit is not yet at the desired contribution levels,” noting “mostly negative contributions” over the previous five years. Loans, comprising 35 per cent of revenues in 2020, contributed only 14 per cent in 2024. LASMF’s continued losses dragged group profit down 24 per cent to $161.9 million for the year ended March 2024, nearly half of its 2022 peak of $306 million.

“We have made ongoing adjustments in this business which, was first significantly impacted by the pandemic, resulting in losses from high delinquency and write offs. There has been stability in the industry as customers recovered, but LASMF, reeling from the impact of the delinquencies, adjusted its risk appetite, reducing its exposure to its usual customer base. The result of this is lower interest income as the portfolio became static,” the report explained.

This forced LFSL, which for 21 years served the “unbanked and near-banked”, to fundamentally reassess its approach. The company pivoted decisively towards more stable micro, small and medium-sized enterprises (MSMEs).

“Right now, all our services are surrounding businesses,” Hall-Tracey told the Business Observer. The target is capturing 20 per cent of Jamaica’s more than 400,000 MSMEs, leveraging bundled services and e-commerce tools. Strategic alliances were formed with groups like the Jamaica Manufacturers and Exporters Association (JMEA) and Jamaica SPICE to lend to operators in those sectors, including farmers and agroprocessors.

Crucially, DBJ-backed lending targets semi-formal entities previously excluded – businesses with nascent records but lacking collateral. Roughly $200 million has been disbursed to about 90 MSMEs through that facility. Altogether, LASMF has disbursed over 10,000 loans totalling $1.3 billion since 2020.

“Those are our addressable market right now. And that is how we’re positioning ourselves, not for the microfinancing business per se, because they we are always serving those nano businesses for loans, but we now, on this side, want to help them with payments,” Hall-Tracey said in May.

Despite this pivot, significant challenges remain. The company made 15 roles redundant in 2024 and reduced the LASMF board from eight to five. Management churn saw three general managers cycle through since 2020. Although the loan book marginally recovered to $1.07 billion in March 2024, group profitability hit $58.6 million for the year ended March 2025 — the lowest since 2011 ($29.8 million), excluding the 2020 loss. Furthermore, $238.9 million was set aside for loan impairments in the March 2025 year, equivalent to 19.2 per cent of gross loans, signalling persistent risks.

Hall-Tracey maintained the company hasn’t abandoned nano-entrepreneurs: “Previously, we were dominant in just serving the very informal nano…but we also realise that we can’t serve everyone the same way… So, we have now positioned ourselves to be able to serve the very, very informal, the semi-formal, and the more traditional and formal customers.”

Leadership Transition and Future Challenges

Hall-Tracey’s tenure transformed LFSL from a single-branch remittance outfit into a diversified provider with a peak of 140 locations. However, the costly aftermath of the microfinance expansion necessitates fresh leadership to execute the complex digital-MSME pivot. The board explicitly seeks a “turnaround architect”. While LFSL’s commitment to financial inclusion endures, its approach is fundamentally recalibrated. The era of aggressive lending concentrated on Jamaica’s highly vulnerable informal economy is over.

The challenge for Williams and the new leadership is proving that lending with “eyes wide open” – amid persistently high impairments (19.2 per cent) and intensifying digital competition – can restore sustainable profitability. Hall-Tracey’s departure marks the end of an era defined by ambitious growth and its painful consequences, setting the stage for a fundamentally different chapter for LASCO Financial Services.