The Finance sets sights on ‘phoenix rising’ in 2011

The Finance Company (TFC), the oldest finance company in Sri Lanka, which boasts of a sterling history of 70 years of unbridled operations, is planning to make a notable comeback in 2011 with its share issue set to roll-out on 11 January.

The company is now backed by the Merchant Bank of Sri Lanka which is a fully-owned subsidiary of Bank of Ceylon.

As a result of regaining its public confidence and the directive of the Central Bank to recapitalise the company, TFC is well poised to forge a solid financial momentum in the coming year.

The most noteworthy achievement of the company is the resilience it showed during the crisis in the financial sector experienced within the last two years and also at a time some international giants stumbled as a result of the global recession.

The third quarter forecast for 2010-11 financial year shows a consistent growth across all financial services and product categories of the company. Deposit new intakes have grown by 47% during the last quarter increasing the new deposits up to Rs. 300 million in a month.

This is as a result of the confidence expressed by the depositors. TFC has also announced that 85% of its depositors are consenting to their deposits being renewed at maturity.

As a result of increasing the number of pawning centres across the island during the last six months, the pawning business has recorded a growth of 50% during the last quarter. In addition, one of TFC’s most recognised business ventures; the real-estate segment (land sales) has grown by a startling 173% giving a boost to the company’s overall revenue.

A remarkable achievement in this category is the lowering of the turnaround period of new projects to an average of four months. This has resulted in a 30% net profit value within a period of four months.

Due to the company’s dominance and experience in the real estate category, the real estate business of the company has taken a sharp up-turn with more than 300 blocks of land being sold in a month.

Discussing the forthcoming share issue and the way-forward for the company, Director/Chief Executive Officer of TFC Kamal Yatawara said: “I want to thank the depositors who stood fast with the company during the times of crisis by maintaining their deposits with us. With all the financial discipline and the stringent management practices adopted during the last 12 months, we perceive the 2011-12 financial year will be a turnaround year for TFC, with the share issue set to roll-out in January.”

Yatawara, whose sole responsibility is to reinstate the allure TFC enjoyed in the past, reflecting on its way forward, said: “Our investments (lending) are growing with efficient credit policies that has reduced the Non-Performing Loans of new investments to a meagre 0.2%. We continue to see a growth in the new investments made, where we have recorded a growth of 42% during the third quarter. With the planned capital infusion, TFC’s aim is to be in the Rs. 1 billion profit category.  TFC’s strategic plans would mostly be centred on reclaiming the industry leadership the company enjoyed prior to 2008. Plans are in the pipeline to further reduce operational costs and improve the inflow of new funds through a clear market strategy and stronger market presence, positioning the company as being innovative and dynamic.

The company’s ongoing restructuring processes would allow it to gear up to these ambitious plans. The rationalisation of branches and amalgamation of some divisions has helped to increase productivity of the organisation by reducing operational costs by around 50%.

In an attempt to reward their loyal customers and to create a win situation for the depositors, TFC is allowing its customers who have been with the company and those who have made new deposits prior to September 2010 to convert 10% of their deposits into equity in order for them to enjoy capital gains as a mark of gratitude for their loyalty.

All-in-all TFC is revitalising its main product portfolio that consists of savings, deposits, land sales, pawning, hire purchase, leasing, education loans and special speed loans with new customer development approaches and confidence building exercises with the ultimate objective of positioning TFC as the leading player in the market.

“With the recent developments in the economy there will be ample business opportunities coming up in the financial sector in the near future.

TFC is ready to reap benefits of these opportunities through the recapitalisation exercise,” said Yatawara. TFC, the country’s first finance company, has over seven decades of unmatched experience in the non-banking finance sector.

The deposit base and asset base of TFC stands at Rs. 26.9 billion and Rs. 30 billion, respectively, making it the custodian of the highest deposit base in the non-banking finance category of the country.

TFC has the largest network of outlets numbering up to 60 spread across the island including the North East Provinces with a total of 1,100 employees.

The extensive service/product portfolio of TFC includes savings, deposits, land sales, pawning, hire purchase, leasing, education loans and special speed loans.