Leasing industry to grow despite interest rate hike

Despite interest rate increases, the leasing industry will perform better than last year, according to sector experts. Kapila Jayawardena, Group Managing Director and CEO, LOLC said the company did not foresee a ‘material problem’ in the leasing business this year. “If someone has a lucrative project, that person will approach either a bank or a leasing company for his funding requirement; both these institutions have increased their rates,” he said, adding that the impact would be on all the lenders.

He said so far, LOLC had seen increased business in leasing. Anil Amarasuriya, CEO Sampath Bank which has a leasing arm (Sampath Leasing), said that the bulk of their businesses come from commercial vehicle leasing. “The interest rates have increased, but there is still a demand as much as last year. This may be because for an example, if a person leases a vehicle for ‘hiring’ purposes, he might have increased his rates to compensate for the high interest rates that he has to pay the leasing company,” he pointed out.

The industry posted Rs.71 billion revenue last year compared to Rs 64 billion in 2005, industry officials said. There are 72 leasing companies in the country, registered under the Central Bank whereas only 52 members are registered with the Leasing Association.