LOLC Group kicks off FY13 with Rs. 1.1 b pre-tax profit in 1Q

LOLC Group has recorded Rs. 9.5 b as gross revenue, Rs. 1.1 b as Profit Before Tax (PBT) and a corresponding Profit After Tax (PAT) of Rs. 721 m in the first quarter.

In the first quarter of FY12 LOLC Group pre-tax profit was Rs. 2.1 billion.

FY13 post-tax was Rs. 721.4 million, down by 60% over the first quarter of FY12 whilst net profit attributable to equity holders was Rs. 656.8 million, as against Rs. 1.7 billion a year earlier.

LOLC said in a statement that performance of the Group’s core business of financial services remained strong despite the external pressures from the economy, liquidity limitations and rising interest rates.

The group’s conservative strategy adopted a few months back on portfolio growth backed by strong collections reflected limited growth in the lending book with strong NPL positions at each lending company.  Portfolio quality remained a top priority and all companies continued its efforts to maintain NPLs at the healthy position as in the previous year. The strong business model of the financial services sector drove LOLC’s main subsidiaries Lanka ORIX Finance Plc (LOFC), Commercial Leasing and Finance Plc (CLC) and LOLC Micro Credit Ltd. (LOMC) to record steady growth in profits. The PBT contribution from each of these companies was LOFC – Rs. 459 m, CLC – Rs. 458 m and LOMC – Rs. 287 m.

The company’s PBT of Rs. 28 m was lower compared with the last year’s first quarter of Rs. 1.4 b due to Rs. 1.2 b profits realised by LOLC in the previous year from the sale of a 10% stake of LOFC as a result of the listing.

The company also recorded marked to market losses of Rs. 155 m during the first three months, further reducing the profits.

The financial services sector remains and strives to be the strongest within the lower SME and the micro space and business growth will continue to be derived from this market segment and the recent transaction entered into increasing LOLC’s stake in Diriya Investments Ltd., which is the holding company of Browns Group, strengthens the strategy of consolidating the strong alignment of the group to the lower SME and micro business development through the close alignment of the financial services sector business and Brown’s exposure to the agriculture sector. Investment in LOLC Group’s associate, Agstar Fertilizer Ltd., further enhances the strategic allegiance to the micro sector.

Consolidating LOLC’s stake in Brown and Company Plc, a company with a 135-year history, a rich asset base and the wide range of product signature and brands, will further strengthen LOLC’s long-term strategy in the trading sector.

LOLC will further consolidate its diversification strategy into the leisure sector with ambitious profitability growth from Eden Resort and Spa and Dikwella Resorts, the two operating properties and to make progress in the refurbishment of the hotels that are closed for operations.

The newer companies in the financial services sector led by the insurance company will continue to expand its business operations in line with the Group’s long-term vision.

LOLC Group Managing Director Kapila Jayawardena said that the results demonstrate the strong growth and performance in the core business of LOLC and with the multilateral funding pipeline already in place, the Group expects to show strong performance in this financial year.