Ideal Finance opens Welimada branch, targets more than doubling branch network

• Strategy follows recent receipt of FDI from Indian financial sector giant Mahindra and further boosted by recent upgrading of rating by Fitch and company’s best-ever financial performance

Ideal Group Chairman Nalin J. Welgama

Ideal Finance CEO Duminda Weerasekare

Ideal Finance Ltd. (IFL) has opened its 13th branch in Welimada, as part of the company’s massive expansion drive to more than double its branch network, by adding 15 new locations within the current financial year (FY 2021/22).

The new branch, which provides a range of services such as leasing, loans (including gold loans) and deposits, was opened by IFL at Welimada, given the area’s importance as a production hub for up-country vegetables and as the location of the Keppetipola Economic Centre, a key trading centre for many types of produce.

The Welimada branch opening will be followed by the opening of new branches at several key locations in September, as IFL ramps up its branch network on the back of several key recent developments. These include attracting new Foreign Direct Investment (FDI) from India’s Mahindra and Mahindra Financial Services Limited (MMFSL), an upgrading of IFL’s rating by Fitch and the company recording its best-ever financial performance in the last financial year (FY 2020/21).

With the latest investment, MMFSL is now Ideal Finance’s largest shareholder with a 58.2% stake, making Ideal Finance its second foreign subsidiary. MMFSL’s total investment in IFL amounts to Rs. 2 billion. Earlier, in 2020, MMFSL secured a 38.2% stake in Ideal Finance, providing the latter the backing of a massive financial giant with over $ 11 billion assets under management, which far exceeds that of Sri Lanka’s entire banking industry. 

Fitch Ratings also recently upgraded Ideal Finance’s rating to ‘AA-(lka)’ from ‘BB-(lka)’ and assigned a ‘stable outlook,’ providing a further vote of confidence on the company’s stability and prospects.

Adding further positive momentum to these developments, Ideal Finance recorded its best-ever annual financial performance in the financial year ended 31 March 2021, emphatically overcoming a host of issues stemming from COVID-19. In this same period, the country’s Non-Bank Financial Institution (NBFI) sector recorded a notable decline, reporting a drop in profitability and a surge in Non-Performing Loans (NPLs). 

However, going against the industry trend, Ideal Finance achieved a simultaneous increase in profitability and a reduction of its NPL ratio. Profit Before Tax (PBT) increased by 76% to Rs. 288.4 million in the financial year ended 31 March 2021 on a year-on-year (YOY) basis. Profit After Tax (PAT) grew by 74% to Rs. 183.8 million YOY. Gross NPL ratio improved to 3.3% for the financial year, from 5.2% in the previous year.

“Mahindra and Mahindra Financial Services demonstrating its confidence in Ideal Finance and in Sri Lanka with this investment is a timely vote of confidence on both the country’s economic prospects and in Ideal Finance’s stability and growth trajectory,” Ideal Group Chairman Nalin Welgama said. “The company’s stellar performance in the midst of numerous challenges, out-performing the industry in all key indicators, demonstrates that confidence in Ideal Finance was well-placed.”  

“Prudent strategic changes delivered dividends, as evidenced by this performance,” Ideal Finance CEO Duminda Weerasekare said. 

“However, it is perhaps even more commendable that in addition to short-term improvements, developments undertaken during this challenging period has laid the foundation for a high long-term growth trajectory – particularly with the launch of our new digitisation strategy.”

“The expansion of our branch network will further strengthen Ideal Finance’s presence in key areas outside of the Western Province,” Ideal Finance Regional Manager Nilanga Jayalath said. 

“This positions Ideal Finance well to support and benefit from the growth of sectors such as agriculture, as the country focuses on boosting domestic production.”

IFL, a NBFI registered with Central Bank of Sri Lanka, commenced operations in March 2012 with a clear focus on the rural and semi-urban sectors. Its lending portfolio consists of gold loans, SME loans, personal loans, motor cars, three wheelers and commercial vehicles. IFL has developed a quality lending portfolio, while recording sustainable annual growth in profitability.