Senkadagala Finance ups after tax profit by 128% to Rs. 506 m in FY12

In results released to the Colombo Stock Exchange this week, Senkadagala Finance PLC announced an overall star class performance in all areas of operations for the financial year ended 31 March 2012 when compared with its performance in the previous financial year.

In key performance indicators, profit after tax rose 128% to Rs. 506.2 million for the period under review compared to Rs. 222.3 million earned the previous year, while profit before tax for the year amounted to Rs. 701 million compared to Rs. 435 million in FY 2010/11, an increase of 61%.

During the year the company’s income rose to Rs. 2.08 billion from Rs. 1.67 billion. The growth in income can be attributed to the growth in interest income to Rs. 1.87 billion from Rs. 1.49 billion last year and a healthy growth in net interest income to Rs. 1.06 billion from Rs. 991.6 million reported last year. The growth in net interest income is commendable in the light of the sharp rise in market interest rates in the latter part of the financial year.

The total asset base of the company also grew steadily to Rs. 11.25 billion for the year compared to Rs. 6.85 billion as at 31st March 2011, a growth of 64.2%.

Total equity of the company grew to Rs. 1.51 billion from Rs. 1.08 billion, reflecting a growth of 39.27%.

 The total capital ratio of the company was 15.2% compared to the minimum requirement of 10% and the sector average of 14%.

Loans and advances too recorded a healthy growth increasing from Rs. 5.4 billion at the end of the previous financial year to Rs. 8.9 billion as at 31 March 2012, an increase of 66%.

Commenting on these results Senkadagala Finance Additional CEO Lalith de Alwis said, “The growth of our business was facilitated by the expansion of our outreach with the addition of 15 new service centres during the year. We now have a network of 45 locations in operation with plans to open a fully fledged branch in Jaffna, including pawn broking and foreign currency bureau services, and five more service centres during the financial year ending 31 March 2013.”

In other related results the earnings per share of the company also showed steady growth increasing to Rs. 9.49 from Rs. 4.17, while the dividend per share rose to Rs. 2.38 from Rs. 1.19.

Net assets per share also increased to Rs. 28.29 from Rs. 20.31 recorded in the previous financial year.

Taxation for the year, comprising value added tax on financial services and income tax totalled Rs. 195.9 million. This is marginally less than in the previous year which was Rs. 213 million. Return on equity for the year grew to 34% which is a significant improvement on the figure of the previous year of 21% and is ahead of the average for the industry in the year under review which is 25%.

The company directors paid an interim dividend of 11.3% amounting to Rs. 60,305,840 out of the profits during the year and now propose to pay a third interim dividend of 7% amounting Rs. 37,357,600 and a final dividend of 5.5.% amounting to Rs. 29,352,400, making the total dividend paid out to 23.8.% for the year.

The ratio of capital funds to total deposits increased from 45.3% at the beginning of the year to 55.2% at the end while the industry average was 20% and the minimum requirement is fixed at 10%.

Continuing with its advances in risk management, Senkadagala Finance recorded significant gains during the year in its efforts at controlling credit risk. The gross non-performing assets ratio (as a percentage of total receivables) was 1.15%, compared to 2.28% in the previous year. This is the lowest recorded in the history of the company and is very much lower than the rest of the sector which has recorded a ratio of around 5.1% at the end of the year. The Company’s net non performing assets ratio after allowing for provisions was 0.44%, compared to 0.8% in the previous year and 1.9% in the industry.

Senkadagala Finance was established in Kandy in 1968 and has since become one of the largest licensed deposit taking institutions registered with the Central Bank of Sri Lanka.

From its inception in Kandy, the company now spread island wide having a total of 30 branches and 15 service centres.