Nation Lanka Finance PLC turns around to make profits
Thursday, 21 November 2013 00:41
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Profits after five years, with growth in assets and lending portfolio
The best testimony for a turnaround in the financial sector, or for that matter in any industry, can be identified when a company wipes out losses and makes profits, which is no exception in the resilient story of Nation Lanka Finance PLC (NLF).
With the infusion of new corporate energy in the form of investment from high net worth individuals and blue-chip organisations, NLF has made a cumulative net profit of Rs. 5 million between 1 April to 30 September 2013 in the first half of the financial year 2013/14.
What is more noteworthy is the fact that the company has achieved this profit after a lapse of five years while completely offsetting the Rs. 110 million losses during the same period in the previous financial year.
Main factors
This success is attributable to few main factors such as growth in lending portfolio, growth in its total asset base of both NLF and the group, introduction of innovative products and services and prudent management of operational costs.
The lending portfolio stood at Rs. 1.7 billion on 1 April 2013 and grew 41% within six months to reach Rs. 2.4 billion as at 30 September 2013. The growth hinges on the expansion in the rapid microfinance lending which is responsible for 60% of the total growth.
Better credit evaluation and expeditious disbursement of funds with efficient service offer are the main pillars of lending growth while efficient collection and recovery have contributed to manage Non Performing Loans (NPL) ratio at a much satisfactory level of 2.1 %, which is one of the best in the current industry standards.
The innovative lending products such as ‘Payen cash’ have also significantly contributed to the growth. Payen cash is a product where a personal loan is disbursed within an hour with minimum documentation, providing hassle-free service to customers.
Aggressive branch expansion and enhancing the presence as well as customer outreach are the other key contributors of expansion of lending portfolio driven by microfinance lending, high yield products and prudent management of operational expenses aiming at profit maximisation, loss mitigation and wealth generation.
Branch expansion
In the previous year, the number of branches stood at 14 while in the year under scrutiny, the number had increased to 21 with a prominent presence in the north and east. NLF is now one of the few companies in its size which has representation in each province and region in the country.
Commenting on the occasion Chief Executive Officer Charith Amarasekara said: “This tremendous achievement does the talking for ourselves, for our commitment, passion and dedication and the strategic guidance from our board of directors.
“The growth of lending portfolio and in turn managing the NPL ratio at very lower percentage is more than testimony to prudent management practices we follow. While we concentrated on identifying the right customer with the required credit worthiness, we have also efficiently carried out collection and recoveries. Tribute of this success should go to each and every member of our 400 staff members whom have contributed their best to turn around our company.”
Growth in asset base
NLF’s total asset base has grown by 53% (annualised ) between 1 April to 30 September 2013 to reach Rs. 4.4 billion, thus fuelling growth in the total asset based of the NLF group to surpass the Rs. 5 billion mark for the first time in the 25 year rich history of NLF.
The group has recorded an impressive net profit of Rs. 48 million between the said period, compared to a Rs. 187 million loss during the same period in the previous year. NLF group consists of Nation Lanka finance, Millennium Housing Development, Nation Lanka Equities and Nation Lanka Capital.
“Our success is not only confined to NLF, whereas it reflects the achievement of the whole group. The inspirational growth of subsidiary Millennium Housing Development through real estate projects is largely attributable for the group’s success.
“The achievement will also encourage us to reach the stipulated land mark of surpassing Rs. 100 million profits during the next six months and inject more energy into our five year plan which is aimed at growing to be a Rs. 10 billion company in the next three to five years.” opined Amarasekara.
The steady growth of NLF was underpinned in June this year with a B Credit rating with a stable outlook awarded by Investment Information Credit Rating Agency (ICRA). This has unveiled a new horizon for Nation Lanka Finance, positioning the company on a clear path to seek a diverse range of long term international funding sources.
Enhanced capital
Enhancing capital in the near term by way of increasing equity capital and raising debt finance both domestically and internationally is a significant priority in the NLF Agenda. The company will introduce a series of new savings products such as a new Islamic Finance Unit with foreign funding as well as its first premier centre (Nation Premier, Colombo) at No. 28, Dickmans Rd, Colombo 5, with superlative service for premier customers which includes Nation Premier loyalty program, free life insurance policy and host of other benefits.
Nation Lanka Finance started off as a small-scale finance company but changed direction under new management, spearheaded by Jayantha Dharmadasa, Asanga Seneviratne, Victor Ramanan, Harshith Dharmadasa and Jayaprakash Rudra to give it a new beginning for a lucrative future.
In 2012, it was a major milestone for the company when it obtained a Central Bank-issued finance license, which propelled the finance company towards medium-scale entity status. Moreover, the granting of the state-endorsed finance license established Nation Lanka Finance on firm footing, creating the needed institutional make up for the company to access a wide girth of public funds.
