Mercantile Investments and Finance expands presence outside Western Province

Mercantile Investments and Finance PLC (MI) continued its expansion drive in line with its corporate strategy of strengthening its presence outside the Western Province.

The company was able to open three new branches in the month of March 2012 in Chillaw, Embilipitiya and Horana. Through the management’s aggressiveness, the company was able to add eight new branches in 2011/12 period alone including branches in districts of Galle, Matara, Kurunagela and Anuradhapura – lucrative locations for business of hire purchase and lease financing. Furthermore, plans are also under way to open a branch in Tissamaharama before the end of the first quarter 12/13.

The company once again was impressive in its financial results, recording post-tax profits of Rs. 623 million for the first half of the financial year ended 30 September 2011. This sound performance reflected a profit growth of 23% or Rs. 117 million in absolute terms in comparison to previous year same period.

MI’s total revenue growth was a significant factor in concluding the period with satisfactory results. Accordingly, the company’s core business income contributed 54 % to total revenue while significant percentage of balance 46 % was provided through non-fee based income namely share trading profits. The relatively greater rise in total income in comparison to the overhead costs improved company’s overall cost income ratio which reduced and stood at 30.45% as at 30 September 2011.

MI displayed a dominant presence in the sector through its management style that stood firm to its fundamentals, deploying focused strategies when necessary supported by a workforce that portrayed unrelenting commitment and effort in reaching corporate objectives.

Despite being in a highly competitive sector, the company through bold measures was able to raise business volumes substantially. As a result, MI’s lending levels grew by 58% in the period under review, while deposits mobilisation growth too was commendably up by 40% in annualised terms enabling the company to reach a total deposit base close to Rs. 5 billion.

Through efficient streamlining of credit processes and measures taken to improve the quality of the loan book, MI was able to curtail credit deterioration, despite the said rise in credit volumes. The non-performing lending ratio of MI therefore stood at 3.9% while non-performing lending in absolute terms reduced by Rs. 100 million from a year before. Furthermore, as at the balance sheet date, the capital adequacy ratios of the company stood imposingly at 23.86% for core capital ratio and 29.08% for total capital ratio, almost three times the minimum regulatory requirement, indicative of company’s strong capital structure.

It was also commendable yet again for the company this period to immerge as the winner of the prestigious gold award in the finance companies sector for the remarkable 12th consecutive year at the Annual report award ceremony held in December 2011, organised by the Institute of Chartered Accountants of Sri Lanka.