K Seeds Investments has identified LOLC Finance PLC as the best performing finance company under the 1st category among the 30 listed finance companies in Sri Lanka through a ranking carried out based on their financial performance for the third quarter of 2020/21.
The report segregates the finance companies based on the size of their asset base, and ranks them in their respective categories among their peers based on ten financial metrics, which are calculated from the published quarterly financial statements. LOLC Finance Company PLC topped the overall spectrum by belonging to ‘Category 1’ (asset base > Rs. 100 billion). The Categories 2, 3 and 4 represent the companies having an asset base between Rs. 50-100 billion, 20-50 billion and less than 20 billion respectively.
The moratorium by the CBSL and the low interest rate environment has made a major impact on the overall performance of the finance companies. However, LOLC Finance PLC has made significant improvement in their performance and has reached the top of the ranking from being in the 4th position during the previous quarter. The report ranks the finance companies according to their financial results released through interim reports on the Colombo Stock Exchange across 10 key performance indicators (KPIs) – cost/income ratio, return on equity, return on assets, net profit margin, net interest margin, impairment to loan book, credit to deposits, operating leverage, net profit growth and loan growth. These 10 KPIs are weighted equally, and an overall ranking is arrived at based on the aggregate score for each category.
K Seeds Investments is a boutique investment bank in Sri Lanka, specialising in mergers and acquisitions, balance sheet structuring, equity/debt placements, treasury management, corporate restructuring and talent management.