Saturday, 4 January 2014 00:00
Nation Lanka Finance PLC (CSE: CSF) is a pioneer in providing total investments and lending solutions in Sri Lanka and has been in operation for over 25 years. Presently Nation Lanka Finance PLC (NLF) serves a cross-section of clients in all industries and amongst them we are considered the most flexible financial solutions provider. NLF is a Public Quoted Company incorporated in Sri Lanka on 15 July 1987 under the Company’s Act No. 17 of 1982, registered and regulated by the Central Bank of Sri Lanka under the Finance Business Act No. 42 of 2011 and has 19 branches island wide. Following are the excerpts of an interview held with the Chairman Jayantha Dharmadasa.
Q: How would you assess the performance of the leasing & finance industry in Sri Lanka in 2013?A: Despite the serious competition created by the banking sector the finance sector has managed to perform profitably at large. Last year the regulatory framework applicable on non-bank financial institutions was strengthened, Government opened the option to raise long-term funds from foreign markets, and most importantly the IFRS reporting created a level playing field.
Q: What are the opportunities you foresee in 2014?A: I always see an opportunity for a quality finance company to compete in the financial industry. We see a strong growth potential in micro finance, especially in the North, East and the Deep South. Other areas of growth I see would come in the areas of leasing, hire purchase, short term loans and pawning. In addition, we expect credit appetite in the market to pick up with the drop in interest rates. This should bode well for the industry as a whole to improve lending prospects.
Q: How best could the existing regulatory framework support the industry growth?A: Change in regulatory framework brings necessary control to ensure financial stability and emphasis on recovery of non-performing loans, maintenance of adequate capital and proper evaluation of loan criteria. The introduction of more stringent guidelines will ensure more controlled and quality growth. However, on a positive note we foresee substantial growth in the micro finance sector especially in the north and east. We remain very positive in this area of growth due to the attractive returns and our low non-performing loans, which is one of the best in the country.
Q: What did NLF achieve under your leadership and the plans for the next five years?A: When I took over NLF, the company needed to ensure credibility and support the existing customer base. This we successfully achieved through a repayment plan of debt taken over from the previous regime. To date, we have repaid Rs. 1.4 billion with only Rs. 75 million to be paid. We are one of the very few companies to repay previous debts. In addition, we have expanded our branch network to 22 covering all regions of the country. Our balance sheet has grown from Rs. 2.1 billion in April 2011 to Rs. 4.3 billion by September 2013. During the same period, our lending bode has grown from Rs. 500 million to Rs. 2.4 billion with deposit base expanding to Rs. 3.1 billion in September 2013 from Rs. 2.1 billion in April 2011. Whilst improving our loan portfolio, we have been very successful in bringing down our non-performing portfolio to around 4%, which is not only one of the best in the industry but also better than some main stream commercial banks in Sri Lanka. For six months ended 30 September 2013, we have reported a net profit after an absence of five years. We are continuously looking to improve our efficiency and customer service and within next five years we want to grow our balance beyond Rs. 10 billion and generate a net return in excess of 25% to look after our stakeholders and investors that have always believed in us and put their trust in us.
Q: What strategy would you use to reach this target?A: Customer centric approach is already implemented which is working well at the present moment and we hope to do a lot more in the future to safeguard customers as well as our stakeholders. We are planning an island wide marketing campaign through our branches with active involvement of our staff. Further, we will be allocating targets to all staff members for deposit mobilisation and incentives are being offered to recovery staff for exceeding their allocated targets. We have also revamped our IT operations through the purchase of new software which will enable us to be on real time basis and match the best the competition could offer.
Q: But how would you mitigate the competition?A: Our two most important assets are our staff and our customers. In order to mitigate the competition, we will work closely with our staff, involving them actively in our promotional activities. On the customer side, we will continue to add value addition in line with the regulatory guidelines and provide quality service through all our branches. We will also empower our staff to make decisions and be accountable through provision of a systematic training program.
Q: So, why should public transact with NLF in terms of deposits?A: NLF took over the commitments of Ceylinco Securities & Finance Ltd. at the time of acquiring a controlling stake in 1st quarter 2011. There were outstanding liabilities of approximately Rs. 1.5 billion out of which more than Rs. 1.4 billion has already been repaid. This should instil confidence of the public to invest & transact deposits with NLF. We have already mobilised over Rs. 3.2 billion in new deposits which further elaborate our confidence in the market place.