Second hand vehicles no longer appreciate in value as in the past, finance company says
Sinhaputhra recorded a growth in profitability in FYE 2014 vs. FYE 2013, despite the industry’s profitability falling from Rs. 14 billion to Rs. 7 billion.
Company Managing Director Ravana Wijeyeratne said, in a statement to the media, that Sinhaputhra’s conservative expansion on credit growth allowed it to steadily maintain its growth momentum without large variations that could be extremely damaging.
“Although, Sinhaputhra faces the same market conditions, the fact that they had not accelerated beyond their means and also thanks to its time tested product – loans, the company has been able to steady itself during a lackluster performance in the vehicle market. Hence while the industry loan book growth shrunk from 21.6 per cent to 12.1 per cent in FYE 2013 vs. FYE 2014, Sinhaputhra’s loan book grew around the same space, at 16 per cent and 15 per cent, which explains a growth in profitability against the industry norms,” he said.
Director Operations Saliya De Alwis, said that no longer does second hand vehicles appreciate as in the past as successive tax reductions have resulted in greater risk to the industry requiring caution on lending exposures on vehicles.
Sinhaputhra’s growth in profits for the last three years has risen from Rs. 52 million to Rs. 74 million and this year, Rs. 84 million.
However, despite this growth, the company said it is concerned about rapid credit expansion to meet the regulators wishes, when the industry had faced higher NPA ratios this year.
Sinhaputhra said it hopes to cross the Rs. 1 billion mark in capital and the Rs. 8 billion mark in assets, to be in line with the Central Bank’s requirements either through internal generation or an acquisition or merger with a smaller company.
The Board of Directors of Sinhaputhra Finance are J.R.J. Nanayakkara (Chairman), K.R.B Wijeyeratne (Managing Director), K.G.D.S.J. De Alwis (Director Operations), E.A.P.D. Ekanayake and Dr. A.R. Karunaratna.