LankaClear’s profit before tax up 32% to Rs. 162 m

The 9th Annual General Meeting of LankaClear (Pvt) Ltd., the National Clearing House was held recently at the Ceylon Continental.

Releasing its Annual Report for 2010/11, LankaClear stated that the company’s profit before tax grew by 32% despite a decline of net revenues by 12% compared to the previous financial year. The decline in the revenues was mainly attributed to the loss in income from front-end services provided by the Company to the Banks on cheque scanning after all Banks migrating to the CD Submission mode from the physical cheque submission mode in July 2010. However, the company had been able to reduce the cost of sales by 33% due to this migration and a significant reduction in maintenance costs. The company recorded a profit before tax of Rs. 162 mn and a profit after tax of Rs. 91 mn.

The company was able to maintain an impressive net profit margin of 26%, which was an improvement from the previous year’s 21%. The company also maintained a very healthy debt : equity ratio of 7 : 93. Earnings per share increased from Rs. 5.30 to Rs. 6.04 and Net Assets per Share increased from Rs. 38.72 to Rs. 43.59.

The company reported that the items cleared through the Sri Lanka Interbank Payment System (SLIPS) increased significantly by 32% compared to the previous year whilst the value of SLIPS items cleared grew by 19%. The total value of items cleared through SLIPS during the financial year 2010/11 stood at Rs. 346 Bn.

Addressing the shareholders at the AGM, the Chairperson of LankaClear, Mrs Priyantha Liyanage stated that system improvements in both the Cheque Imaging & Truncation System (CITS) and Sri Lanka Interbank Payment Systems (SLIPS) resulted in significant improvements in efficiency, features and security of transactions which benefited the Bank customers. During the year, CITS Settlement Clearing migrated to online mode eliminating the requirement of Banks to submit CDs in this leg of clearing. This resulted in LankaClear Inward Return Submission time being advanced to 1.30 PM, facilitating the collecting Banks to give good value to customers by 3 PM. The internal efficiency improvements carried out in the Main Clearing Leg enabled LankaClear to extend the outward item submission time to 7 PM facilitating Banks to accept cheque deposits for T + 1 clearing up to the counter closure time of 3 PM. She further stated that the upgrading of the SLIPS application in September 2010 resulted in complete online submission of items and T + 0 clearing for credit transactions. With this improvement, the Banks are now able to credit customer accounts by 3 PM on the same day on items received by LankaClear by 12 NOON and by 9 AM the following day on items received by LankaClear by 6 PM.

The Chairperson also stated that despite the continuous increase of some of the operational costs, LankaClear has been able to maintain the same tariff charged for clearing of a cheque from the inception  of CITS in 2006 to 2011 due to continuous efficiency improvements and cost reduction measures in areas like energy and maintenance.

LankaClear is a company jointly owned by the Central Bank of Sri Lanka and all Licensed Commercial Banks.