LB Finance tops in K Seeds Investments’ ranking report

LB Finance Deputy Managing Director Niroshan Udage (right) and Executive Director Ravindra Yatawara receive the report from K Seeds Investments Financial Analysts Dukaraha Arulrajah and F.S.A. Razack

K Seeds Investments has identified LB Finance PLC as the best performing Finance Company under the 1st category among the 28 listed Finance Companies in Sri Lanka through a ranking carried out based on their financial performance for the first quarter of 2023/24.

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 ten financial metrics, which are calculated from the quarterly financial statements. LB Finance topped the overall spectrum by belonging to “Category 1” (asset base > Rs. 100 billion). The 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 under review, from 1 April 2023 to 30 June 2023, most finance companies in Sri Lanka faced a multitude of challenges. These challenges included an economic crisis, tax increases, and a deceleration in economic growth. It witnessed unfavourable macro-economic and market conditions. However, the recent IMF bailout and debt restructuring agreement have brought some relief to the sector. This environment created a significant impact on the financial health and status of finance companies as they have a significant exposure to higher risk individuals and institutions as compared to licensed commercial banks.

However, despite all these factors, LB 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 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, 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.