Business Times

Some 60% of LOLC's profits from financial services

Sri Lanka's LOLC has revealed that 60% of its Rs. 7 billion in after tax profits resulted from its core, financial services offerings. Also noted, during the 12 months to end March 2011, group after tax profits grew 194% year-on-year to Rs. 7 billion, from Rs. 2.4 billion the previous year, while consolidated gross revenue was Rs. 32.1 billion, more than double 2010's Rs. 14.9 billion.

Commenting in LOLC's 2010/2011 annual report, company officials also highlighted that the addition of insurance and stock broking offerings in July 2011 and plans to take its islamic business, pawning and wealth management offerings to "greater heights" as the way forward for the company.

Also revealed, LOLC is working according to what it is calling a "forward integration model" which had already driven its acquisition of Brown and Company, suggested to be the country's largest importer of agricultural machinery; a move that it said strengthened its leasing arm. Further, LOLC's buying of a 20% stake in Seylan Bank and a 15% stake the Housing and Development Finance Company (HDFC) would help to improve its financial portfolio.

It was also suggested that a new, eco friendly garage being built by its subsidiary, LOLC Motors, would link together the leasing and fleet management business units as well as, soon, LOLC Insurance into a chain which would possibly add even more value to the mentioned business units. Officials also signalled that the next area of expansion would likely be LOLC's agri business portfolio, which comprises tea, rubber, timber and forestry, as well as its hydro power operations.

Further noted, the group's loan book grew by 48% to Rs. 112 billion, while non performing loans were maintained at 2%. This was also compared to the industry average of 7%. Additionally, deposits was said to have grown by 72% to Rs. 17.4 billion, and total assets was stated as Rs. 111.8 billion, with its increase from the previous year mainly due to financial assets. Also revealed, Rs. 23.3 billion from the balance sheet's 48% growth was identified as coming from the lending portfolio.

With regard to LOLC's self-described strongest segment, it was noted that gains from financial services were at 20%, to Rs. 11.9 billion, even despite interest rate reductions. Further, LOLC controlled Commercial Leasing Company had increased its loan book by 88% to Rs. 18.4 billion while maintaining a 0.8% Non Performing Loan ratio.

And LOLC's micro credit arm had bettered its loan book by 106% to Rs. 8.2 billion, while at the same time procuring five foreign funds. It was also noted that the latter featured a growth of lending to women, with 25,000 female customers compared to 6,000 previously and 95% of them coming back for more loans.

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