Abans Finance pre-tax profit up 51.3 % in 2016-17

Abans Finance, a member of the Abans Group, has registered a pre-tax profit of Rs. 197.4 million for the year ended 31st March 2017, compared to Rs. 130.5 million recorded in the corresponding year of 2016, achieving a YoY growth of 51.3 per cent.

Post–tax profit of the company for the period under review has also improved by 48.2 per cent, from Rs. 90.1 million in 2016 to Rs. 133.6 million in 2017, the company said in a media release. The Abans Group consists of a large diversified set of companies and divisions overlooking the sales and financing of consumer durables/household appliances, motor vehicles, environmental services, logistics, hospitality and finance.

Abans Finance enhanced its stated capital from Rs. 382.3 million to Rs. 844 million during 2016/17 and further to Rs. 1,121.4 million during the current financial year of 2018. Ironwood Investment Holding (Pvt) Ltd has invested in Abans Finance and currently holds 41.89 per cent equity of the company. Ironwood is a private equity firm that successfully raised a Sri Lanka- focused Private Equity fund of up to US$30 million in long term (8 year) capital commitments.

The company has continued to increase its profitability amidst external challenges such as increasing interest rates and slowdown in consumption. The increase in profitability was mainly due to favourable growth in net interest income, the release said. “A slight shrinking of Net Interest Margins (NIM) had an adverse impact on the Net Interest Income (NII) of the entire NBFI sector and Abans Finance was no exception to this trend. Nevertheless, NII of the company recorded a remarkable increase of Rs. 162.98 million or 23 per cent during the period under review from Rs.708 million in 2016 to Rs. 871 million in 2017, aided by the significant expansion of the asset-base of the company since 2016, coupled with prudent liability management strategies,” the release said.

Operating expenses of the company which stood at Rs. 372.6 million earlier increased to Rs. 470 million during the year under review. This increase was mainly due to the rise in person- nel costs. The Cost to Income ratio without VAT and NBT on Financial Services in 2017 has increased to 51.5 per cent from 49.0 per cent recorded in the pre- vious year. The company said it expects to gain the benefits of the business expansion in the coming years and intends to improve on this ratio.