LB Finance 2011 FY net profit doubles to top Rs. 1 b mark

LB Finance Plc has in 2010/11 financial year seen its net profit double to cross the Rs. 1 billion milestone aided by healthy growth all round.

As per interim results released last week, LB Finance’s profit after tax had increased by 104% to Rs. 1.02 billion in financial year ended 31 March, 2011 from Rs. 500.1 million in 2009/10 financial year.

Pre-tax profit rose by 90% to Rs. 1.66 billion whilst profit from operations had risen by 83% to Rs. 1.9 billion.

Impressive bottom line performance was on top of a healthy 33% growth in income to Rs. 5.5 billion from Rs. 4.1 billion in 2009/10. Interest income grew by 30% to Rs. 5.13 billion and interest expense declined by 7% to Rs. 2.4 billion bringing the net interest income of LB Finance in 2010/11 to Rs. 2.72 billion, up by 60% over the previous year. LB Finance had also benefitted from a 103% increase in other operating income amounting to Rs. 353 million. Provision for fall in value of investments, bad and doubtful loans and write offs in 2010/11 was Rs. 137.5 million as against Rs. 194.4 million in the previous year.

In the fourth quarter of 2010/11 LB Finance had posted a Rs. 583 million profit from operations, up by 28% whilst post-tax profit was Rs.  391 million up by 83%. Though its income had grown by only 3% to Rs. 1.6 billion LB Finance had benefitted by a massive 232% increase in other operating income of Rs. 172 million in the fourth quarter.

In 2010/11 LB Finance loans and advances had grown to nearly Rs. 2 billion from Rs. 1.05 billion a year earlier. Separately Gold loans had increased by 81% to Rs. 5.6 billion whilst biggest business lease rentals receivable and stock out on hire had grown by 56% to Rs. 16.3 billion in 2010/11.

Total assets of LB Finance topped the Rs. 28 billion figure, up from Rs. 17.1 billion in end 2009/10.

Deposit mobilisation by LB Finance in 2010/11 had increased by Rs. 7.2 billion or 58% to Rs. 19.6 billion.

Total liabilities of the company had increased by Rs. 10 billion or 65% to Rs. 25.4 billion as at 31 March, 2011. Shareholders’ funds grew from Rs. 1.75 billion in 2009/10 to Rs. 2.6 billion.

Commitments and contingencies as at 31 March, 2011 was Rs. 115.2 million as against Rs. 28 million a year earlier.

LB Finance’s lease and stock out on hire operations had generated a pre-tax profit of Rs. 1.5 billion, up from Rs. 915.5 million last year whilst this segment’s revenue rose from Rs. 2.8 billion to Rs. 3.6 billion.

Gold loans business had delivered second highest profit of Rs. 619.6 million up from Rs. 299.6 million whilst its revenue rose from Rs. 772 million to Rs. 1.23 billion. Via provision of term loans profit was Rs. 71.2 million, as against Rs. 53 million whilst its revenue rose from Rs. 153 million to Rs. 301 million.

LB Finance’s real estate business continue to suffer losses, at Rs. 22 million in 2010/11, though down from Rs. 30 million in the previous year. Its revenue rose from Rs. 8 million to Rs. 13.6 million. Losses from other business amounted to Rs. 108 million, down from Rs. 114 million whilst revenue dipped from Rs. 350 million to Rs. 328 million in Fy11.

LB Finance’s return on equity in 2010/11 had increased to 39% from 32% a year earlier whilst return on assets (after-tax) was 3.64$, up from 3.21%.

Its Core Capital to Risk Weighted Asset Ratio was 12.91%, down from 14.39% and total capital to risk weighted asset ratio was 14.24%, lower in comparison to 17.34% in 2009/10. Capital funds to total deposit liabilities ratio was 13.3% as against 14%. LB Finance’s non performing accommodation (net of interest in suspense was Rs. 1 million, as against Rs. 0.5 million last year. Total accommodations (net of interest in suspense) was Rs. 24 million, up from Rs. 12 million whilst these figures were applicable respectively for net total accommodation (net of provision for bad and doubtful debts and interest in suspense) as well.

The Company’s required minimum amount of liquid assets stood at Rs. 1.9 billion, up from Rs. 1.2 billion, available amount of liquid assets were Rs. 2 billion, up from Rs. 1.8 billion whilst available amount of Government securities were Rs. 1.5 billion, up from Rs. 1.1 billion in 2009/10.

LB Finance’s shares had a good year with closing price for 2010/11 being Rs. 175, up from Rs. 62 a year earlier. The highest price for the year was Rs. 325 whereas in 2009/10 it was only Rs. 69. The number of shares in issue amounts to 69.257 million, up from 34.628 million.