LB Finance 1H net profit up 146% to Rs. 401 m

LB Finance has yet again set the finance world alight with a spectacular rise in profits assuming epic proportions.

The financial powerhouse just released its income statement for the quarter ending September 2010, recording a phenomenal 154% year-on-year increase in quarterly net profit from

Rs.87 mn in September 2009 to Rs.220 mn, as well as a net profit of Rs.401 mn for the six months ended in September, a year-on-year increase of 146%.

The company with an illustrious history of four decades has been setting a tough act to follow, riding a crest of a wave since business tycoon Dhammika Perera took over its reigns and what impresses industry analysts is the ability of LB Finance to consistently sustain its upward momentum even through a global recession.

LB Finance reported its total income for the quarter at Rs.1.298 bn, a 31% increase from the previous year’s Rs.993 mn, and its total income for the six months ended September at Rs.2.452 bn, an increase of 26% from the previous year’s Rs.1.95 bn. Interest income was reported at Rs.1.241 bn and interest expenses at Rs.555 mn, bringing the quarter’s net interest income to Rs.686 mn, a 90% increase from 2009. The net interest income for the half ended September stands at Rs.1.25 bn, climbing 79% from the previous year’s Rs.698 mn. The company’s profit before tax for the quarter stood at Rs.408 mn, again showing a massive increase of 177% from the previous year’s Rs.147 mn, and the profit before tax for the half stood at Rs.721 mn, a 162% increase from the previous year.

The financial giant also clocked in its total assets at Rs.21.159 bn, showing a year-on-year growth of 40%, as well as a 30% year-on-year growth in deposits to Rs.14.545 bn. LB’s total equity as at 30 September 2010 was reported to be Rs.1.989 bn, showing an astounding 41 % increase from the period September 2009, and the company’s return on equity ratio has risen to 42.85% from 23.60% in 2009 as has its return on assets ratio (after tax) from 2.38% in September 2009 to 4.44% this year.

 “The figures reported for the last quarter showcase LB Finance’s sustained exemplary performance,” stated Dhammika Perera, Chairman of LB Finance. “Our success is firmly anchored on a 4-decade foundation of astute financial stewardship. It is our passion for what we do that enables us to achieve such great heights in such little time, and our vision for the future that helps us to respond unwaveringly to the confidence placed in us by our depositors and stay faithful to our stakeholders. We feel this visionary approach is instrumental to our growth.”

LB Finance shares brought significant capital gains to investors at the Colombo Stock Exchange, seeing an increase in market value per share to Rs.295.70 this September from Rs.62.00 in March 2010, with a highest price of Rs.340.00 this quarter. Earnings per LB Finance share amounted to Rs.11.59 for the first six months of 2010, while the price-earnings ratio based on annualised earnings came to 12.76 times. Further company’s net asset value per share stood at Rs.57.46 at the end of this quarter against Rs.40.89 at the end of September 2009.

 “We have seen unprecedented growth over the past few years,” stated Perera. “We are continuing to drive forward with large-scale expansion and innovative strategies that offer more appropriate financial solutions to an even greater number of the Sri Lankan public.”

With a reputation for being a ground-breaking pioneer in the industry, LB is further reinforcing its operations with several new branch openings, the most recent being in Vavuniya and Jaffna. “We are aggressively driving our expansion across the island, particularly towards the North and East,” elaborated Perera. “We want to take root in as many provinces as possible during this post-war period of recovery and growth, and reach out to Sri Lankan everywhere, especially those living below the poverty line. We hold steadfast to our vision of bringing more of our fellow countrymen into the formal economy.”

The company is known to have assembled the most hard-nosed team of financial veterans led by  Sumith Adhihetty as Managing Director and consists of firebrand young professionals who bring in new thinking and the energy to thrive on the cutting-edge.

LB Finance operates through a highly-integrated network of branches offering cutting-edge solutions through services such as acceptance of deposits, leasing, hire purchase, consumer durable financing, mortgage loans, pawn broking and other credit facilities.

Dhammika new Chairman, Lalit Deputy Chairman

Largest shareholder Dhammika Perera was last week appointed as the new Chairman of LB Finance following the retirement of B. M. Amarasekera recently.

Attorney-at-Law by profession Amarasekera counts over 50 years in the practice of Law.

The decision to appoint Perera who was Vice Chairman as Chairman was made last week at the LB Finance Board meeting.

As at 30 September, Perera held 71.3% stake in LB Finance. Of that stake 51% was transferred for Rs. 5.3 billion last week to Vallibel One Ltd., the new investment holding company floated by Perera.

Perera is a well-known prominent entrepreneur and investor whose business interests include Hydropower Generation, Manufacturing, Hospitality, Entertainment, Banking and Finance.

The LB Finance Board also appointed Lalit N de S. Wijeyeratne as the Deputy Chairman.

Wijeyeratne had a long career at Richard Pieiris previously and now serves on several Boards of listed companies. First appointed to LB Finance Board in November 2008, Lalit is a fellow of the Institute of  Chartered Accountants in Sri Lanka and counts over 35 years experience in Finance and General Management both in Sri Lanka and overseas.

He was the Group Finance Director of Richard Pieris Plc from January 1997 to June 2008 and also held senior management positions at Aitken Spence & Company, Brooke Bonds Ceylon and Zambia Consolidated Copper Mines Ltd.