Merchant Bank ends 2012 with 22% growth in income and 17% assets growth

Wednesday, 6 March 2013 00:43 - - {{hitsCtrl.values.hits}}

In the backdrop of a slowdown in economic growth resulting in reduced credit growth and volatile market conditions, MBSL group reported an income growth of 22% to reach Rs. 3.8 billion.

Assets under management of the company as at end of 2012 amounted to Rs. 12 billion and the group assets totalled Rs. 22.5 billion representing a total asset growth of 21.7% and 17.1% respectively. This significant achievement was possible amidst difficulties and challenges brought on by the volatile domestic and international market.

As a result of the company’s comprehensive branch expansion drive in 2012, it led to an unprecedented opening-out of 16 new branches and extension offices in one day thus expanding the network to 30.

The negative performance of the stock market has also had a pessimistic impact not only the performance of the associate company – Lanka Securities Ltd. – but also on the returns on investments in quoted shares. Rising interest rates further deteriorated the profitability of the company for 2012. MBSL Savings Bank which was acquired for resurrection also had a negative impact on the group profit due to inadequate capital.

Although, a considerable expenditure had to be incurred on the network expansion, this will bring in better results in the years to come despite the negative impact on the profitability of the company for 2012. Several such new branches have been able to reach break-even point indicating the viability of the company’s vision.

The ‘Siyath Saviya’ micro financing project that was started with a small Rs. 10 million base in November 2010 is now showing strong growth and the loan portfolio has by now expanded to Rs. 300 million. Within the past two years MBSL has been able to reach around 8,000 rural farmers and entrepreneurs to encourage them to forge ahead with their dreams of success.

MBSL is confident that in the years to come, the micro credit program will grow into a massive project that will improve the bottom line of the company and uplift the living standards of rural communities, while supporting the Government’s drive to develop rural economies.

Merchant Bank of Sri Lanka PLC (MBSL), at present has 30 customer touch points.

The company has a stated capital of Rs. 1,607 million with its largest shareholder, the Bank of Ceylon, holding a strategic stake of 72%. MBSL has entered into a strategic alliance in the year 2005 with SBI Capital Markets Limited, which is the largest investment bank in India.

The Board of Directors of MBSL comprises of a directorate who are eminent leaders in management/industry and other opinion makers in their own right, with affiliations to the private and public sectors. MBSL was awarded long-term institutional rating of AA- and short term rating of P1 by RAM Ratings Lanka Limited. Its subsidiary companies, MCSL Financial Services Ltd., which has 13 branches island-wide including Jaffna, and MBSL Insurance, with 55 branches, add strength and stability to the MBSL group. In addition, MBSL holds a 29% share of Lanka Securities Pvt Ltd.