Central Finance secures first place in K Seeds Investments’ ranking report

K Seeds Investments identified Central Finance PLC as the best performing finance company under the first category among the 27 listed finance companies in Sri Lanka through a ranking carried out based on their financial performance for the third quarter of 2024/25.

The report segregates the finance companies based on the size of their asset base and ranks them in their respective categories among their peers based on 10 financial metrics, which are calculated from the quarterly financial statements.

Central Finance topped the overall spectrum by belonging to “Category 1” (Asset Base > Rs. 100 billion). Categories 2, 3 and 4 represent the companies having an asset base between Rs. 50 to 100 billion, Rs. 20 to 50 billion, and less than Rs. 20 billion, respectively.

Sri Lanka’s finance companies experienced notable improvements in performance during the third quarter of 2024/25, supported by the country’s accelerating economic recovery. A combination of improved liquidity, declining non-performing loans, and increased investor confidence contributed to a more stable and resilient financial sector.

One of the key factors driving this positive momentum was the decline in credit risk, as businesses and individuals benefitted from easing economic pressures. With stronger economic fundamentals, finance companies saw higher loan repayment rates, reducing the burden of bad debt and improving overall asset quality. This allowed non-bank financial institutions (NBFIs) to enhance their lending capacity, particularly in key sectors such as leasing, microfinance, and consumer credit.

Additionally, the improved macroeconomic environment and successful debt restructuring efforts boosted market sentiment, attracting foreign investment into Sri Lanka’s financial sector. The increased availability of funds enabled finance companies to expand their portfolios and offer competitive lending solutions to small and medium-sized enterprises (SMEs) and individuals.

A more stable interest rate environment also played a crucial role in strengthening the profitability of finance companies. Lower funding costs allowed these institutions to improve their net interest margins, while enhanced liquidity conditions ensured a smoother flow of credit across the economy.

Overall, the economic recovery during Q3 2024 had a direct and positive impact on Sri Lanka’s finance companies, fostering stronger financial stability, improved asset quality, and greater opportunities for growth. With continued economic resilience and policy support, the sector is well-positioned for sustained expansion in the coming months.

Despite all these factors, Central Finance PLC managed to maintain their top rank in the series of ranking reports released by K Seeds Investments on the finance sector of Sri Lanka. The report ranks the finance companies according to their financial results released through interim reports on the Colombo Stock Exchange across 10 key performance indicators (KPIs) – cost to income ratio, net profit margin, impairment to loan book, return on equity , return on assets, net interest margin, credit to deposits, operating leverage, net profit growth, and loan growth. These 10 KPIs are weighted equally and an overall ranking is arrived at, based on the aggregate score for each category.

K Seeds Investments is a boutique investment banking firm, specialising in mergers and acquisitions, balance sheet restructuring, equity/debt placements, treasury management, corporate restructuring, and talent management.