LB Finance Sept. profits surge...
The profits surged at LB Finance PLC during the three months ended September 2018 (2Q19) amid higher credit costs and moderating growth in new loans and leases, which indicated higher margins have buttressed the company’s bottom-line.
The licensed finance company with slightly over Rs.130 billion in assets gave roughly Rs.2.4 billion in leases and hire purchase and Rs.1.9 billion in loans during the six months ended September 2018 (1H19). The higher lending rates and restrictions on vehicle imports significantly upended the fortunes of the licensed finance companies in 2018 as their portfolios and growth were dominated by vehicle financing.
LB Finance, a Dhammika Pereracontrolled firm, reported earnings of Rs.1.23 billion or Rs.8.89 cents a share for the July – September period compared to Rs.950.9 million in earnings reported for the corresponding period last year.
The earnings translated into a 30 percent increase over the previous year.
The net interest income also rose by a strong 30 percent year-on-year (YOY) to Rs.3.6 billion, as the rise in interest incomes surpassed interest expense.
The company may have re-priced its facilities higher and given new facilities at higher rates to compensate for the moderation in new facilities during 2018.
The company may also have consciously slowed down extending new facilities amid weakening asset quality in the sector. The interim results typically do not carry the non-performing loan ratios of the licensed finance company sector.
The credit costs hit Rs.326.1 million for the three months, significantly up from Rs.127.6 million in the year earlier.
Meanwhile, for the first half of FY19, the company reported earnings of Rs.2.39 billion or Rs.17.26 a share compared to Rs.1.89 billion or Rs.13.65 a share reported for the corresponding period last year. The net interest income for the period was Rs.7.0 billion, up 31 percent YOY. The company raised Rs.5.0 billion in deposits during the six months and has raised another Rs.3.0 billion in other borrowed funds.
Business magnate Dhammika Perera’s investment vehicle Vallibel One PLC together with Royal Ceramics Lanka PLC hold 77.83 percent stake in L.B Finance PLC.