Nation Lanka Finance reports Rs. 391 m net profit in 3Q
Friday, 30 January 2015 00:12
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Total asset base up 52% to Rs. 6.7 b
Nation Lanka Finance Plc (NLF) has posted a Rs. 391 million net profit in the third quarter ended on 31 December 2014, helped by a Rs. 303 million net gain in financial investments.
Net profit during the first nine months amounted to Rs. 214 million sharply up from Rs. 9 million reported for the same period in 2013. Operating profit for the third quarter was Rs. 88 million, up from Rs. 4 million a year earlier. In a statement, NLF said the company has improved its performances with the passage of time on a regular basis, thus demonstrating its crystal clear focus on facing the current challenges in the financial industry, with a long-term strategy.
While the company has registered higher performances on a year-on-year and quarter-on-quarter basis, NLF has also been successful in stretching its key indices such as its lending portfolio, deposit base, total asset base and net asset per share value. The financial performances alone do not do the talking, yet, its commitment towards the inherited depositors from the previous management, whose deposits were paid back in full amounting to over Rs. 1.5 billion, is a vivid depiction of fulfilling the needs of the management change.
Thus the company is already in the records as the first and only financial company to fully repay distressed depositors under the former Ceylinco management.
This hinges on the prudent planning initiated by a consortium of high net worth investors, backed by the Nawaloka Group which took over the reins in 2011 and has steered the company to a solid financial foundation and strong growth. Announcing an outstanding financial performance for the third quarter and for the nine months ended 31 December 2014, NLF presents a reflection of the company’s continuous upward growth.
Growth in the total asset base is a key attribute, which has exceeded Rs. 6.7 billion for the first time in the rich 27-year history of NLF, representing more than a 52 % year-on-year increase. In the previous year the total asset base was at Rs. 4.4 bn. The main premise on which the asset base growth occurred is the phenomenal 72% increase in the lending base which, compared to industry growth, is “more than the expected growth.”
The lending portfolio of NLF is replete with a range of products such as microfinance, leasing, hire purchases, personal and business loans and pawning which are delivered with a series of tailor-made solutions.
The innovative business loan scheme, launched during the latter part of the year namely ‘Biz Cash’, attracts high demand from the entrepreneurs and SMEs and is a key feature in the lending portfolio. Microfinancing also continued to play a dominant role in NLF’s business model, which caters to only women across the country, where the model has been developed with the intention of enabling and empowering entrepreneurship at the grassroots level in order to stimulate economic and sustained SME growth. Hence the NLF balance sheet indicates a growth in the lending portfolio of Rs. 1.7 billion from its base of Rs. 2.4 billion, as at 13 December to end at Rs. 4.1 billion. Likewise the company’s FD base also recorded considerable growth of around 46% year-on-year, crossing the Rs. 4.8 billion mark by the end of December 2014. In 2013 it hovered around Rs. 3.3 billion. From a share value perspective, the nets asset per share value has arisen from Rs. 1.19 to Rs. 2.13 per share by the end 14 December, representing a 79% increase.
‘Remarkable quarter’
Return on Equity (RoE) stood nearly at 40% with a Return on Assets (RoA) ratio of around 3% by 14 December.
A noteworthy achievement is how the company has been able to manage a lower Non Performing (NP) portfolio than the industry while rapidly expanding the lending portfolio which stood at around 6% as at 31 December 2014. NLF’s regulatory requirements such as the Core Capital, Capital Adequacy Ratio (CAR) and Liquidity ratios have recorded exceptional performances and stood above minimum thresholds imposed by the regulating authority which is the Central Bank of Sri Lanka.
“We have just concluded a remarkable quarter, which is the best three months we have witnessed since 2008. We are now making significant operating profits and with our current strategy and growth momentum, this is likely to continue and reach new heights in the very near term. Our target is to make Rs. 1 billion operating profits for the next financial year and to grow our asset base to Rs. 10 billion, which looks very achievable considering we have outpaced the industry in all facets during the past nine months,” said CEO Charith Amarasekara, commenting on the company’s outstanding performance. One of the best performing sectors is its Microfinance arm. Microfinance operations are carried out in a modified Grameen joint group lending model, with aspects extracted from the ASA model. Highly-trained microfinance experts at NLF not only give financial assistance but are also pivotal in assisting and advising clients on managing and operating respective businesses entities.
NLF General Manager Madhawa Edussuriya stated: “Overall our products are doing well in the market, especially our microfinance portfolio which fuels growth in the company. The recently introduced Biz-cash product also has a lot of demand. Our new fully-integrated IT system with Oracle Financials backing is also fully functional now giving us vital information on a real-time basis to effectively manage the business. This is has enabled us to give the best service to our valued customers who are at the pinnacle of our company strategy.”
Commenting on the recent performance of NLF shares on the CSE, Amarasekara said: “The current share price does not fully reflect the hard work that has gone into resurrecting the company, particularly considering that we have fully repaid over Rs. 1.5 billion to previous depositors of the Ceylinco group whom we inherited, nor does it capture the future potential of this company and growth prospects. At current price levels, this is probably one of the very few listed companies, if not the only listed company, that can give over a 100% return in less than one year to any investor.” Thus, NLF has posted remarkable achievements in the third quarter of the year and in 2014 as a whole, wherein its performances both do the talking and thinking for high financial performance that shall be considered by the public and the investors to achieve their desired goals through the ever-growing NLF. Stemming from the backdrop of the recent remarkable performance, NLF is fully ready to forge ahead and become a new dimension in the finance industry excelling in customer service, transparency and accountability while valuing its own corporate culture, image and unique brand identity.
