The LOLC Group reported strong growth for the second quarter with income for the 3 months almost doubling when compared with the same period of the previous year. The Group income for the 3 months increased by 96% to Rs. 2,706 Mn from Rs. 1,381 Mn. The income for the 6 months increased by 76% as against the previous year to Rs. 4,666 Mn. and the profit after tax for the 6 months increased by 55% to Rs. 425 Mn.

Commenting on the performance for the 6 months to September, Group Managing Director Mr. Kapila Jayawardena said that LOLC was able achieve strong growth during these volatile times by way of careful management of the portfolio through sound credit practices and risk mitigation strategies, a healthy product mix and the continued confidence of customers in LOLC as a provider of financial solutions as well as the effort of its committed staff members.

The financial product portfolio offered by the LOLC Group includes finance and operating leases, hire purchases, loans, Islamic financing, debt factoring, invoice discounting, working capital loans and micro finance loans as well as insurance brokerage services, stock brokerage services, savings and fixed deposits, resident and non resident foreign currency accounts (RFC & NRFC). Further, the fleet management services offered by LOLC includes vehicles for short term as well as long term hire.

LOLC acquired Commercial leasing Company during the first quarter of the current financial year, positioning the LOLC Group as the market leader in the leasing industry in Sri Lanka. Commercial Leasing maintains a credit rating of A- (lka) from Fitch ratings and LOLC’s credit rating was affirmed at A (lka). One of the top achievements of the finance Company (Lanka ORIX Finance Company) in 2008 was the upgrade of its rating to A- (lka) by Fitch.

The Group’s operating profit before net interest cost for the quarter more than doubled to Rs. 1,954 Million from Rs. 896 Million last year, an increase of 118% and the profit after tax for the quarter increased to Rs. 279 Mn.
 
The Group’s net interest cost for the six months increased by 97% to Rs. 2,818 Mn due to increase in interest rates as well as increase in borrowings supporting the growth. However, the LOLC Group was able to contain its interest expense through borrowing from foreign financial institutions at a lower cost than borrowing locally. LOLC is one of the few institutions in Sri Lanka with direct access to such funding opportunities due to its financial stability and strength. The ability of LOLC to source funding from foreign institutions will continue to assist LOLC maintain its borrowing cost at a lower level than its peers, thereby gaining a competitive advantage.

The Group’s operating profit before net interest cost for the 6 months to September increased to Rs. 3,267 Mn from Rs. 1,749 Mn last year, an increase of 87%, while the profit after tax increased by 55% to Rs. 425 Mn.

The LOLC Group’s provisioning for doubtful debt for the 6 months increased by 24% to Rs. 150 Mn. However, the provision for the quarter was at the same level as last year, at Rs. 77 Mn with greater emphasis placed on collections and containing non performing loans.
 
Lanka ORIX Finace Company (LOFIN), the fully owned subsidiary of LOLC too reported a strong growth over the 6 months to September. LOFIN’s income increased by 73% from last year to to Rs. 549 Mn.

Further, LOFIN received approval from the Central Bank of Sri Lanka to mobilise foreign currency fixed and savings deposits, in addition to mobilising local currency deposits, a first for the nonbanking financial sector.

Deposits mobilised from customers nearly doubled when compared with the previous year to Rs. 4,642 Mn, displaying the sustained confidence of the public in the Company as a reliable and stable institution even in times of turbulence. The ATM card for savings deposit holders was launched in September, and depositors can withdraw cash from any Commercial Bank ATM, or from the company’s own ATM located at the LOLC head office in Rajagiriya.

Total assets of the Group increased to Rs. 48,654 Mn from Rs. 28,621 Mn a year ago. The rapid growth of the Group was fuelled through the wide reach of the LOLC Group providing easy access to its customers through the island wide branch network and LOLC service centres located at selected LIOC filling stations. Greater convenience to customers was achieved through the strategic alliance with Bank of Ceylon, where customers can now make payments to LOLC through any branch of Bank of Ceylon.
 
Lank ORIX Insurance Brokers, a fully owned subsidiary of LOLC, was the second largest insurance brokerage firm in the Country at the end of the previous year as per the insurance industry statistics published by the Insurance Board of Sri Lanka.

In October, LOLC launched its Micro Credit subsidiary with equity partnership from the Netherlands Development Finance Company, FMO. The Micro Credit subsidiary will enable a more focused service to a significant segment of the population of Sri Lanka with immense potential who would if not find it difficult to gain access to finance. The Central Bank too has granted approval to the Micro Credit Company to conduct leasing operations.
 
Enhanced access to customers has always been a priority to LOLC. This was demonstrated once again when LOLC entered in to an agreement with the postal department of Sri Lanka to service customers through the postal network. To begin with, LOLC commenced micro finance operations in 5 post offices, namely in Malsiripura, Balangoda, Alpitiya, Kuliyapitiya and Godakawela . Mr Jayawardena said that the focus of LOLC’s expansion would be on enhancing the ease of access to finance in the regions, thereby unleashing the true potential of our rural entrepreneurs.