LOLC’s impressive performance puts them at the helm of the corporate sector
View(s):LOLC Group (LOLC) has concluded another financial year on a high note as per the results for the year ended March 31, 2020 – posting an impressive Rs.19.8 billion Profit after Tax (PAT) for the year in comparison to Rs.19.6 billion PAT last year.
In a short span of time, LOLC has truly emerged as a “Sri Lankan global player” having operations in over 10 countries, the group said in a media release this week.
While the group performance was affected by local externalities, such as the Easter Sunday attack, the subdued economic growth and the political instability in FY19/20 that resulted in the company to record dips in the net interest income and hikes in impairment charges, LOLC has been able to enjoy its stellar performance largely based on the earnings stemming from its overseas financial operations and the gain on a bargain purchase of Rs. 5.4 billion from the acquisition of the largest sugar production plantation company in Africa.
Moving forward, LOLC is well set to realise the financial synergies generated from the PRASAC divestment through realigning the capital position of the group.
“Established 40 years ago, LOLC has spearheaded the Small and Medium Enterprise (SME) lending and microfinance revolution in Sri Lanka and the region. Excelling on a national level, LOLC has now established itself as a leading microfinance institution in the countries which it operates. With its financial strength and the perfected micro finance business model in the region, the group is now well-positioned to expand its operations beyond Asia to the African continent where a substantial opportunity lies in serving a large bottom of the pyramid population. Overseas expansion has not only offered LOLC, diversified revenue streams with increased financial stability, but also has added resilience with a well-spread risk profile,” according to the release.
LOLC already made its debut in Africa by acquiring a microfinance bank in Nigeria in October 2019 and by starting LOLC Finance Zambia as a green field project. In FY 2020/21, LOLC will focus on consolidating its existing businesses while pursuing promising investments in Africa and Asia for long-term value creation.
The group announced the board’s decision to sell its 70 per cent stake in PRASAC to the South Korean KB Kookmin Bank for a consideration of US$603 million in January 2020. LOLC received the relevant regulatory approval in March 2020 and concluded the transaction in April 2020.
Despite the sale of PRASAC, LOLC still has a foothold in the fastest growing Southeast Asian country via LOLC Cambodia, the fourth largest Microfinance Institution (MFI) in terms of portfolio size. The group owns 97 per cent of LOLC Cambodia that has an asset base surpassing $1 billion, a gross loan portfolio of $857 million, a deposit base of $501 million and a recorded profit of $34.6 million.
Today, with the financial sector representation in eight countries along with promising investments in Asia and Africa in the coming years, LOLC has successfully established itself as a strong global financial conglomerate. With this standing, the group says it is poised to be a global financial catalyst with a multi-currency, multi-geographic microfinance and SME platform in the future.
In spite of the challenging and unexpected external shocks, LOLC Finance PLC (LOFC) continued to hold its market leadership position amongst the Non-Banking Financial Institutions (NBFIs) in the country with an asset base of Rs.192 billion, a portfolio of Rs.134 billion and deposits of Rs.99 billion. The company posted Rs.3.9 billion PAT in the year under review.