Sinhaputhra Finance FY14 profits up by 13.5% to Rs. 84 m
Thursday, 10 July 2014 00:00
Sinhaputhra recorded a growth in profitability in FYE 2014 vs. FYE 2013, despite the industry’s profitability falling from Rs. 14 billion to Rs. 7 billion.
Managing Director Ravana Wijeyeratne said that Sinhaputhra’s conservative expansion on credit growth allows it to steadily maintain its growth momentum without large variations that could be extremely damaging.
Although Sinhaputhra faces the same market conditions, the fact that it had not accelerated beyond its means and also thanks to its time-tested product, loans, it has always been able to steady itself during a lacklustre performance in the vehicle market.
Hence while the industry loan book growth shrunk from 21.6% to 12.1% in FYE 2013 vs. FYE 2014, Sinhaputhra’s loan book grew around the same space, at 16% and 15%, which explains a growth in profitability against the industry norms.
Director Operations Saliya De Alwis commented that the past experience of secondhand vehicles appreciating no longer holds due to successive tax reductions, bringing in greater risk to the industry requiring caution on lending exposures on vehicles.
Sinhaputhra’s growth in profits for the last three years has been from Rs. 52 million to Rs. 74 million and this year Rs. 84 million.
However, despite this growth, the company was concerned about rapid credit expansion to meet the regulator’s wishes, when the industry had faced higher NPA ratios this year than in the last year was the view of Senior AGM Credit Supervision and Risk Management Sabriya Amanulla. The senior management also stated that the company needs to focus on products outside the vehicle market as well.
Sinhaputhra Finance PLC has had a long history and expertise in small scale business loans not to be confused with the more aggressive product of micro credit, and has found it to be a successful product.
Senior AGM Credit Pandula Aluvihare commented that this product is versatile and suits all markets and even the company’s focused line of tourism related investments is easily served through this flexible loan product.
Furthermore, Sinhaputhra’s limited exposure to gold pawning did not have the adverse effects of the present depressed climate for gold prices that many have faced.
With a fall in interest rates, the margins have widened, allowing Sinhaputhra to reduce its rates for its borrowers. Whilst this has been advantageous for the company, Consultant Investment Promotions Michael Cooke noted that it has become a severe hardship for many Sinhaputhra depositors who depend on their monthly interest. Yet, despite these lower rates, Sinhaputhra has experienced a surge in deposits that has considerably reduced their requirement for Bank credit lines.
In the year going forward Sinhaputhra hopes to cross the Rs. 1 billion mark in capital and the Rs. 8 billion mark in assets, to be in line with CBSL requirements either through internal generation or an acquisition or merger with a smaller company.
The Board of Directors of Sinhaputhra Finance PLC comprises J.R.J. Nanayakkara (Chairman), K.R.B Wijeyeratne (Managing Director), K.G.D.S.J. De Alwis (Director Operations), E.A.P.D. Ekanayake and Dr. A.R. Karunaratna. They are strengthened by Senior Consultants to the Board K.H.K. Wijayadasa and A.M.G. Weerakoon.