People’s Leasing profits surge 80.9% in Q1 amidst challenging environment

People’s Leasing & Finance PLC (PLC), said it has successfully concluded the first quarter of the fiscal year 2023/24 with a year-on-year increase in profit of 80.9% in the midst of a challenging economic landscape. 

In a statement PLC said its top line interest income recorded an impressive 10.2%, reaching Rs. 7,465 million owing to the increased investment income during the quarter. However, the company’s net interest income showed a modest fall when compared to the first quarter of 2022/23. This was mostly the result of higher interest expenses brought on by the repricing of deposits to higher rates in line with higher policy rates. Despite the stated decrease in net interest income, PLC was able to end the first quarter with a profit after tax (PAT) of Rs. 331 million as opposed to Rs. 183 million recorded in Q1 2022/23 thanks to the significant year-on-year reduction in Impairment Charges as well as reduction in operating expenses, demonstrative of an intensified commitment to internal sustainability. 

Similarly, PLC Group also recorded a PAT of Rs. 552 million during Q1 2023/24, reflecting a year-on-year increase of 21.5% mainly driven by the significant reduction in the Group’s impairment charges and other losses for loans and receivables.

Even in the face of a highly inflationary environment, PLC successfully reduced total operating expenses by 3.5% compared to the corresponding quarter in the year prior due to a determined effort to increase efficiency through digital initiatives, right-sizing of branches, and improvements in internal processes. PLC recognised the significance of recalibrating its balance sheet in a setting not favourable to business expansion and took strategic measures to ensure the right sizing of its balance sheet resulting a total asset base of Rs. 155,380 million as of 30 June 2023. Backed by these strategic moves, total asset base of the PLC Group also remained resilient at Rs. 179,948 million as of 30 June.

In an extremely volatile and complex business setting PLC adopted a highly disciplined liquidity management approach to ensure financial stability whilst maintaining capital adequacy ratios well ahead of the statutory minimums at the end of Q1. The majority of PLC’s funding needs were met through improved collections enabling PLC to remain watchful in growing its deposit base in a high-interest environment. Despite these measures, the deposit base of PLC remained robust at Rs. 93,228 million as of 30 June, showcasing strong customer confidence. The Group deposit base also remained strong at Rs. 100,439 million, as at 30 June.

Expressing confidence and reiterating PLC’s commitment to its customers CEO Shamindra Marcelline said: “Our Q1 performance underscores our ability to navigate a complex, dynamic and challenging business landscape. It also demonstrates our unwavering commitment to our valued customers and the strength of our operational fundamentals. Even in the face of adversity, we remain steadfast in delivering financial solutions that empower individuals and businesses, contributing to the economic prosperity of all Sri Lankans.”

The company’s prudent risk management and increased focus on improving collections led to Impairment Charges for loans and other losses notably decreased by an impressive 74.0% over Q1 2022/23, with impairment charges for the period under review totalling Rs. 442 million. In a high-interest regime with limited opportunities for business growth, total Loans and Receivables portfolio of the Company and the Group stood at Rs. 104,051 million and Rs. 116,292 million respectively as at 30 June.