Singer Finance sets performance benchmarks for industry

Having achieved a remarkable Gross Non-Performing Loan (NPL) ratio along with a number of other key performance indicators, Singer Finance has established itself as one of the best finance companies in the industry, setting the standard for others to follow.

 Having already increased its lending portfolio to Rs. 3 billion as at 31 March 2010 since its incorporation in 2004, the Company has set its sights on further expansion through a corporate plan that emphasises superior service, products, and financial discipline.

Compared with an industry average NPL ratio of 11.7% as at 30 June, 2010, Singer Finance’s ratio of 2.3% as at 30 June, 2010 is outstanding. The Company’s Gross NPL ratio is significantly low for consumer durables financing (approximately 1.1%) while leasing and hire purchase financing for vehicles also has a low NPL percentage (approximately 6.75%). Given a financial environment where the NPL ratios in the industry had been weakening due to the adverse macroeconomic environment, the fact that Singer Finance’s ratio has been improving since the 2007 financial year is especially impressive.

The Company’s low NPL ratio, which is a reflection of its high asset quality, has been achieved through prudent marketing, credit and finance management practices and the guidance of its  parent company, Singer (Sri Lanka) Plc.

For example, even though regulatory policy stipulates 50% provisioning for loan defaults over six months and 100% provisioning at 12 months, Singer Finance is far more stringent, with 50% provisioning for defaults over four months and 100% provisioning at the end of six months in the case of leasing and hire purchase facilities.

For consumer loans, the Company makes a 50% provision for defaults over two months while 100% provisioning takes place at the end of four months. By adhering to these higher self-imposed standards, Singer Finance has been able to maintain a healthy loan loss coverage ratio and expedite the recovery process.

As a Registered Finance Company fully owned by Singer (Sri Lanka) Plc, Singer Finance provides an extensive range of financial services to a wide variety of Sri Lankans.

Standard services such as vehicle hire purchase and leasing and the acceptance of fixed deposits are bolstered by a number of innovative products, including agro-equipment financing as well as credit facilities for products manufactured by Singer. Much like its parent company, Singer Finance is renowned for its unrivalled service standards, such as the industry’s best online, real-time repayment channels, which allow customers to make their leasing, hire purchase and loan installment payments at any Singer Finance branch or any one of over 370 Singer Plus, Sisil World, Singer Homes, and Singer Mega showrooms island wide.

Singer Finance has widened  its reach with 6 branches nationwide, in addition to its  Head Office business unit located at 331, Dr. Colvin R. de Silva Mawatha, Colombo 2 (Union Place), as well as 6 customer service centres. The Company’s branch and customer service network caters to  the Western, North Central, Wayamba, Central, Southern and Uva Provinces, with main branches in Kurunegala,  Anuradhapura, Wennappuwa, Wattala, Kandy and Matara, and customer service centres in Thambuttegama, Medawachchiya, Nikaweratiya, Dambulla, Mahiyangana and Galle.

As customers have embraced Singer Finance’s core products, the Company’s interest income and net interest income have soared, with a compound annual growth rate of 75.6% and 62.8% respectively.  These aggressive gains have been driven by a rapid expansion of the Company’s share of the leasing and hire purchase market, as well as the successful launch of consumer financing for Singer (Sri Lanka) customers in 2009.

Singer Finance has also recorded a significant improvement of 19% in its net interest margin.

The significance of Singer Finance’s accomplishments is magnified, when the difficult environment faced by the RFC sector is taken into account. For example, the Company has been able to achieve a steady growth in its deposit base, despite the outflow of funds from the RFC sector caused by the troubles experienced by certain finance companies. Singer Finance recorded a 38% year-on-year growth in its public deposits for the 2009/10 financial year.

The Company’s future prospects look even brighter, with a healthy capital adequacy ratio of 16.10% as at 31 August, 2010 attesting to its financial stability in terms of capitalisation.

As Singer Finance continues to execute its strategic plan to perfection, all those who are associated with it look set to benefit.