LB Finance and Central Finance secure first place in K Seeds Investments’ ranking report

K Seeds Investments said it has identified LB Finance PLC and Central Finance Company PLC as the best performing Finance Companies 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 first 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.

LB Finance PLC and Central Finance Company PLC 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, 20 to 50 billion and less than 20 billion respectively.

During the quarter from 1 April to 30 June 2024, Sri Lanka’s financial sector continued to navigate a challenging macroeconomic environment, marked by both signs of stabilisation and ongoing difficulties. The economy showed moderate recovery, supported by favourable Central Bank policies and reforms under the IMF’s Extended Fund Facility, which aimed to stabilise economic conditions and encourage growth. Inflation rates, which had been elevated in previous years, came under control due to effective monetary policy measures by the Central Bank of Sri Lanka (CBSL). Additionally, the Sri Lankan Rupee remained relatively stable due to improved foreign exchange inflows from tourism and remittances.

With these positive developments, loan demand in the financial sector began to increase at a slower pace, influenced by the continued reduction in borrowing costs throughout the year, lower inflation, and the impact of positive fiscal policies, K Seeds said. 

The asset quality of financial institutions continued to recover with decreasing levels of non-performing loans (NPLs), as households and businesses slowly started to increase per capita income. Profitability in the sector also showed signs of recovery with decreasing provisioning for bad debts and comparatively stable operating costs. Financial institutions managed to maintain adequate capital buffers, further underscoring their resilience.

Throughout the quarter, licensed finance companies demonstrated adaptability by diversifying their product offerings, enhancing digital services, and implementing cost optimisation measures. While the financial sector showed signs of gradual stabilisation and recovery, the path forward remained uncertain and contingent on domestic policy decisions and external economic conditions. Overall, the period from 1 April to 30 June, was characterised by cautious optimism, with the potential for growth in the subsequent quarters depending on continued economic stability and effective policy implementation.

K Seeds said with all these factors, LB Finance PLC and Central Finance Company 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 ten 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 ten 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.