Due to tight funding and high operating costs.

JOHANNESBURG (Reuters) - South African micro financier Blue Financial Services Ltd said on Tuesday it expected to report a loss in the half year to August 31 due to tight funding and high operating costs.

The company said restricted levels of funding due to the global financial crisis had limited its ability to grow its loan book, while operating costs were unproportionally high compared to revenue due to the lower than expected levels of funding.

It said a rise in the impairment of loan advances in the South African portion of its loan book and weaker African currencies against the South African rand had weighed on its performance.

"To enhance the provisioning policy, the company is undertaking a thorough review of its loan books in conjunction with the external auditors," it said in a trading statement.

Blue said it was delaying expansion into new markets in the short term and engaging with funders to restructure current funding and secure new funding lines.

The company said last week it had only raised half of its 800 million rand financing needs for the year but expected to continue its expansion plans.

Blue, which offers financial services to individuals including personal, education and home improvement loans as well as debt consolidation services, plans to put some money in a treasury hub in Mauritius and use it as a guarantee to tap local funding in Africa.

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