Financial Times

MBSL to focus on leasing
Merchant Bank of Sri Lanka, which has begun to turn around after years of heavy losses and made a "fair profit" in 2003, plans to focus on leasing and corporate finance in the future, its CEO and managing director Sunil Wijesingha said.

The bank on Friday announced an after-tax profit of Rs 71 million in the year ended December 31, 2003 on a turnover of Rs 384 million. Wijesingha, brought in to turn around the bank, attributed the improved performance to good recoveries, reduced borrowings, lower interest rates, expanded leasing and tighter management processes.

"In future, we will continue to focus on leasing as a very stable source of income - it is one of our cash cows," he said."We're at the moment strengthening our corporate finance division to make use of the opportunities available once the economy gets off the ground. Because of the uncertain environment we're still a little cautious but we've begun recruiting new people." MBSL ended five years of losses with a modest Rs 7 million profit in 2002. Turnover that year was Rs 346 million. But it still has accumulated losses of Rs 1.5 billion although it has sharply pruned its borrowings.

Borrowings, which had been as high as Rs 4 billion in 1997, had been brought down to Rs 1.2 billion. "We had to service our loans. Interest rates went up by a huge amount. Now, with interest rates coming down, we are able to make to make big profits," he said. "Earlier, our borrowings were in excess of our normal business requirements because we had borrowed and lost. Now we've settled them so borrowing costs have come down."

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