MBSL & Finance PLC records exceptional bottom line growth in Q3

Monday, 28 November 2016 00:01 -     - {{hitsCtrl.values.hits}}


The Merchant Bank of Sri Lanka & Finance PLC (MBSL) has recorded an exceptional third quarter financial performance in 2016 with robust growth in revenues and profitability, following its unparalleled three-way merger of 2015. 

MBSL finalised one of the most complex amalgamation processes witnessed in the country to date, in 2015, by merging with two of its subsidiaries, MCSL Financial Services and MBSL Savings Bank, to integrate three separate companies into a single consolidated financial services entity.  The effectiveness of the internal integration process rolled out by MBSL is evidenced by the rapid return to profitability of the MBSL Group and the sustained upward growth trajectory of the institution during 2016. Significantly, this operational performance was achieved with no retrenchment of employees. 

MBSL Chairman Dr. Sujeewa Lokuhewa stated the company’s growth strategy has been aligned with national development objectives. “We have aligned ourselves with the economic strategies of the government, which will be the guiding framework for the bank from 2016 onwards. To support government economic development plans we are developing new products and services and implementing IT solutions for product and service delivery to reach into the far corners of the country, to cater to rural markets and in particular rural SMEs.  I am confident our expansion in the future will also contribute both directly and indirectly towards employment generation for young people in rural parts of the country,” Lokuhewa added.

MBSL demonstrated an outstanding 1,539% cumulative bottom line growth year-on-year by the end of the third quarter 2016, with a profit after tax (PAT) of Rs. 257.3 million, against Rs. 15.7 million recorded in 2015. The PAT for the quarter had surged ahead of 2015, to reach Rs. 122.3 million, compared to Rs. 59.2 million in 2015. This sustained robust performance by the company resulted in reversing the negative bottomline of the Group for the third quarter of 2015, moving the MBSL Group out of the red and into a profitability. The bottom line of the MBSL Group gained by 696% to reach a PAT of Rs. 186.2 million, by end September 2016, from a loss of Rs. 31.2 million in 2015. This cumulative growth in profitability was mainly due to the 296% growth in PAT in the third quarter of 2016, to Rs. 108.6 million, compared to the Rs. 27.4 million achieved in 2015. 

Gains in profitability have been accompanied by improvements across most aspects of the financial dashboard with MBSL increasingly consolidating its post-merger market position.   The net interest income recorded a growth of 3% and 5% year-on-year for the Company and the Group respectively, while the net operating income increased by 41% and 28% year-on-year  for the Company and the Group respectively. 

“With the merger we have improved our operational efficiencies and we are currently focusing on providing a better experience for our customers. Overall, the merger has contributed towards growing the market and scope of business, and we are looking into further growth opportunities in new market segments,” said MBSL CEO T. Mutugala. During the financial year 2016, MBSL leveraged the public deposit taking licenses held by MBSL Savings Bank and MCSL Financial Services to expand its product portfolio by introducing a range of savings products for adults and minors. The lending portfolio was expanded by entering the gold loans sector.  MBSL is also in the process of upgrading its core banking system. Once operational in 2017, the new core banking system would enable MBSL to introduce a range of modern electronic banking products and services, while also enhancing operational efficiencies, to further benefit the public.  In addition, MBSL is also in the process of improving and expanding its branch and service centres to enhance its customer value proposition. 

Currently the MBSL customer touch points extend across the island with 48 branches and service centres. Further expansion is on the cards in the new financial year to enhance customer convenience and easy access to financial services. With internal human resource and process integration now completed, MBSL is geared to demonstrate a strong turn-around in its financial performance by end 2016, with growth plans on track for the new financial year of 2017.