Tuesday, 18 November 2014 00:18
Nation Lanka Finance PLC (NLF), a growing financial entity with the backing of the Nawaloka Group, Asanga Seneviratne and a consortium of high net worth investors, announced an outstanding financial performance for the second quarter ended 30 September 2014 and for the seven months ended 31 October 2014.
This is a reflection of the company’s continuous and rapid growth and the commitment of its new management which took over in 2011 and is steering the company to a solid financial foundation and strong growth.
Key to this outstanding performance was the growth in the Balance Sheet. Total Asset base surpassed Rs. 5.9 billion for the first time in the rich 27 year history of NLF, representing more than a 35% year-on-year increase. The driving force behind the asset base growth was the phenomenal 44% increase in the lending base which compared to the industry growth is exceptional. Similarly, the company’s FD base also recorded substantial growth of around 50% year-on-year, crossing the Rs. 4.5 billion mark by end October 2014.
With the company positing a net profit of around Rs. 203 million for seven months ended 31 October 2014, Return on Equity (RoE) stood nearly 40% with a Return on Assets (RoA) ratio of around 4%. The most important element in this growth story is how the company has been able to manage its Non Performing (NP) portfolio, which stood at 5% as at 31 October 2014, well belowindustry norms. NLF’s regulatory requirements such as Core Capital, Capital Adequacy Ratio (CAR) and Liquidity ratios have recorded exceptional performances and stood above minimum thresholds imposed by the regulating authority which is the Central Bank of Sri Lanka.
Significantly, NLF has achieved this remarkable performance whilst fully repaying its inherited depositors, amounting to more than Rs. 1.5 billion. NLF is perhaps the only company in the country to achieve this milestone, repaying distressed depositors of the original Ceylinco group in full.
“The achievement up to 31 October 2014 yet again highlights the superior growth momentum currently enjoyed by NLF, which is much above the industry growth. I can assure you that we will be continuing this for the remainder of this financial year as well as into the next. We have already laid out plans to exceed Rs. 1 billion operating profits for the next financial year and also to grow our asset base to Rs. 10 billion,” said CEO Charith Amarasekara, commenting on the company’s outstanding performance.
One of the best performing sectors is its Micro Finance arm. Microfinance operations are carried out in a modified Grameen joint group lending model, with aspects extracted from the ASA model. Highly-trained micro finance experts at NLF not only give financial assistance but are also pivotal in assisting and advising clients on managing and operating respective businesses entities. NLF General Manager Madhawa Edussuriya stated, “Our products are doing well in the market, especially our microfinance portfolio which fuels the overall growth in the company. Prudent management of lending portfolio, improving collections and minimising NP ratio are corner stones of our success.”
With over Rs. 5.9 billion in assets, 430 staff in 25 locations island-wide and nearly 100,000 customers, NLF is poised to become a benchmark financial institution of the country. NLF has recently launched its newest product ‘Uthum’ children’s minor savings productand more new products such as Islamic Finance are in the pipeline to enter in to the market in 2015. Under its new theme ‘Forging Ahead’, NLF is set to expand its branch network to facilitate more than 150,000 customers by March 2015. These new products and new locations will open up new horizons and enable the company to serve customers from all walks of life.
Reflecting on Central Bank’s consolidation plan, Asanga Seneviratne said, “We are currently negotiating with 2-3 parties, including an international firm, which have all agreed to recapitalise the company and take NLF to the next level. Despite the outcome of these negotiations, we are fully geared to thrive on a stand-alone basis if necessary, and we as investors, see the real potential of this company and the contribution it could make to the growing segments of the economy.”
Commenting on the recent performance of NLF shares on the CSE, Seneviratne said, “The current share price does not fully reflect the hard work that has gone into resurrecting the Company, particularly considering that we have repaid over Rs. 1.5 billion to previous depositors of the Ceylinco group whom we inherited, nor does it capture the future potential of this company and growth prospects. At current price levels, this is probably one of the very few listed companies, if not the only listed company, that can give over 100% return in less than 1 year to any investor.”
Stemming from the back drop of the recent remarkable performance, NLF is fully ready to ‘forge ahead’ and become a new dimension in the finance industry excelling in customer service, transparency and accountability whilst valuing its own corporate culture, image and unique brand identity.