People’s Leasing 1Q revenues up by 27% to Rs. 4.36 b

People’s Leasing Company (PLC) saw its revenues rise nearly 27% in the June quarter, led by growth in its core leasing business, the group said.

In results released to the Colombo Stock Exchange, the country’s biggest leasing company said group revenue rose to Rs. 4,367 million during the first quarter of June 2012, from Rs. 3,443 million reported in the same quarter a year earlier.

“Revenue growth came, despite the company operating in a challenging period,” People’s Leasing Company Plc Chief Executive Officer D.P. Kumarage said. “We saw a sharp rise in cost of raising funds, because of rising interest rates,” he added.



Recurrent net profits increased by 7.3% from Rs. 671 million to Rs. 720 million. June quarter 2011 net profits includes a non-recurrent general provision reversal of Rs. 1,063 million     which took the total net profit for the first quarter 2011 to Rs 1,734 million.

Net interest income for the group rose three per cent to Rs. 1,564 million during the first quarter of the 2012/13 financial year. Interest and similar income rose 30% to Rs. 3,823 million in the June quarter. Interest and similar income accounts for about 88% of the June quarter group revenue.

The group revenues from sales of imported vehicles fell to Rs. 59 million in June 2012, from Rs. 255 million a year earlier. Fee-based activities were up Rs. 81 million in June 2012, as against Rs. 61 million reported in the same quarter a year earlier. Income from other activities was up to Rs. 404 million from Rs. 177 million, according to provisional results filed with the CSE. The group reported earnings per share of 43 cents in the June quarter over Rs. 1.44 in the same quarter of 2011.

Rentals receivables on leases, higher purchase and Islamic finance portfolio gained 28% to Rs. 78,792 million year-on-year in the first quarter. There was a slowdown in vehicle demand during the June quarter, as motor vehicle prices rose sharply due to duty hikes and depreciation of the Sri Lankan Rupee. Cumulative motor vehicle registrations are estimated to have fallen by 26% year-on-year to 94,169 in June 2012, according to the Department of Motor Traffic.

The money market average weighted prime lending rate has risen from 12.80% to 13.39% in the June quarter, which is up 4.61% year-on-year. Interest and similar expenses, gained 58.20% to Rs. 2,259 million in June 2012. This was mainly due to a 16% year-on-year increase in group borrowings, excluding deposits from customers to Rs. 57,884 million. There was also a 55% increase in deposits to Rs. 9,526 million.

“With the anticipated economic recovery towards the third and fourth quarter of this year, we expect our disbursements to improve from the present low levels,” Kumarage said. “We currently remain well capitalised with Tier I and Tier II Capital Adequacy Ratios at 25.42% each, well above the minimum regulation of five and 10 per cent each,” he added.

In June 2012, the company has also applied to the Central Bank of Sri Lanka to register as a Licensed Finance Company (LFC). If granted, it would convert the company’s status from a specialised leasing company and diversify its funding sources to include retail sources which would be an added strength.

People’s Leasing, shares of which commenced trading on the Main Board of the Colombo Stock Exchange in November 2011, is a specialised leasing company established in 1995.

State-owned People’s Bank owns 75 per cent of People’s Leasing Company, followed by National Savings Bank and the Employees’ Provident Fund.