Mercantile Investments shows steady results amidst industry slowdown

Mercantile Investments and Finance PLC (MI) saw its pre-tax profits and post-tax profits up at Rs. 879 million and Rs. 514 million respectively for the financial year ended 31st March 2018 reflecting 180.2 per cent and 154.4 per cent growth rates compared to the last year's moderate performance.

Amidst the industry slowdown, MI sustained steady core business revenue growth of 24 per cent, enjoying improved core margins on the diverse lending product mix offered whilst efficiently managing the funding cost, a MI media release has said.

“In keeping to the corporate sustainable growth strategy, total assets advanced to the Rs.40 billion mark, up by 7.6 per cent. The vibrant credit products offered to the market enabled the company to grow the loan book by 11.5 per cent and to supercede the challenging business conditions and the constraints witnessed in the vehicle sales industry.” The growth was driven by both the term based lending and the traditional lease financing which recorded 28 per cent and 8 per cent growths respectively for the financial year. With a 51 per cent portfolio increase, micro finance lending played a key role in boosting yields and was a catalyst in self-empowering women to play a wider role in the economy.

Stemming from the previous year, few large accounts though adequately collateral backed continued to impact the asset quality, with the Non-Performing Lending Ratio (NPL) moving up to 7.58 per cent, the release added. “However, through close recovery monitoring, debt restructuring and recovery actions, impairment charges was curtailed and brought down by 32 per cent compared to the previous period.”

The total deposit base was up by 18 per cent and reaching the Rs. 20 billion milestone for the first time.” Having expanded the shareholder capital base to Rs. 8.7 billion by the close of the financial year, the company maintained a solid 43.26 per cent Capital Funds to Total Deposits Liability Ratio. MI's financial strength was further fortified by the strong Tier 1 and Total Risk Weighted Capital Adequacy prudential ratios which stood significantly above the minimum regulatory limits and the industry average, at 16.24 per cent and 17.36 per cent respectively. This continued to be a hallmark in MI's financial success story that spans over fifty years, driven by the unwavering commitment to business excellence and the sustainable growth focus.”