By Cheranka Mendis
People’s Leasing, the undisputed market leader in the industry for nine years, is going for a record profit this year having achieved a profit of Rs. 2.2 billion within the first five months of the year.
CEO of People’s Leasing D.P. Kumarage told the Daily FT that the company, with a net asset base of Rs. 65 billion at the end of last financial year, is gearing up for better times ahead, starting with record profits by the end of the financial year and a growth of 100% from the previous year.
The leasing company, which has six subsidiaries, has grown considerably within the years and is now recognised as the company with the highest portfolio in the industry.
“In the last financial year we made a net profit of Rs. 2.5 billion, which was the highest in the industry. Out of 23 commercial banks in Sri Lanka, only seven have achieved that profit, which goes to show how strong we are in the market,” Kumarage said.
“If you take all financial indicators, we are the best in the industry. Be it nonperforming, return assets, return on equity or cost income ratio, we are the best and Fitch rating confirms this.”
Going strong as a diversified group, the company is going in for a listing which is expected to be realised by October this year. “We have made our request to the Stock Exchange and are now awaiting approval.”
In an industry where competition is severe, the company has managed to acquire 27% of the market share.
Kumarage stated that leasing is the most competitive product in the financial market.
“There are almost 80 players in the market and we have a 27% market share. The market is definitely growing, but I don’t think we can increase market share. However, we will grow along with the market. We hope to come up to 30% but that is a tough task as the other companies will also compete in the same way.”
With 100% growth achieved this year, the biggest question is whether this growth can be sustained. “We can sustain it. We have grown 100% from last year to this and we hope to manage a 10-15% growth in the future. This is good enough for is, we are big enough now.”
Plans for the future include increasing the number of branches and serving customers of all subsidiary companies under one roof. “We have a finance company that is quoted on the Colombo Stock Exchange. We purchased the company during the financial crisis of 2007/2008. It was then called Seylan Merchant and we converted it to People’s Leasing Finance. The company runs on profit now and within the first year we were able to mark a profit of Rs. 102 million as against the loss of Rs. 186 million they had recorded earlier,” Kumarage said. “This company will be making a profit of almost Rs. 400 million this year.”
The company also has a property development company, People’s Property Development, People’s Leasing Havelock Properties Ltd. and an insurance company, People’s Insurance, which has been ranked number six in the industry within two years of operation.
“We have passed HNB Assurance to get to number seven and NDB Aviva to become number six. We are quite happy about the performance of the company. It is running at a profit and within a few years we hope to be number three.”
People’s Leasing also has a microfinance company named People’s Microfinance Limited.