LOLC Records Significant Top-line Growth of 50% - 24 Nov 2006

LOLC, the pioneer in leasing in Sri Lanka formed 28 years ago, commenced its journey, with an objective of developing the SME sector by introducing the concept of leasing as a way to acquire productive assets. The Company not only fulfilled this objective, but has been a frontrunner in this business, and been a catalyst in the sector creating and shifting paradigms in SME sector financing with innovating solutions and service options.

LOLC group reached new heights in performance when the group recorded excellent top line and bottom line growth for 2007/08. The aggressive growth strategy of the group generated revenue of Rs. 5.9 Bn, a 50% increase over last year. The Profits recorded increased by 21% to reach 1.3Bn. The growth in profits is considered noteworthy, given the negative environmental pressures that prevailed during the financial year with high interest rates and inflation causing an increase in borrowing costs.
All business units contributed well towards the growth with asset based lending still making the highest contribution to the profits. Also, Working Capital and Savings businesses did exceptionally well, with profits from the former making significant contribution to the group’s bottom line.  Deposits mobilized by the Savings business unit reached Rs. 3.3 Bn, a 91% growth over the last year.

Despite the increase in interest costs and the resultant negative impact on collection of dues from customers, the Company was able to contain non performing loans within acceptable levels due to effective collections and recovery strategies adopted. The risk mitigating strategies adopted by the company enabled the Company to perform well despite the external pressures of a negative economic scenario.
In his review, Mr. Kapila Jayawardena, Group Managing Director/ CEO, explained that the focus of the year and the successful performance was based on three fundamentals: enhanced accessibility to customers, the creation of a strong pipeline of funding for the future, and the promotion of innovation as a business differentiator.

LOLC, during the year entered into an innovative partnership with Lanka IOC (India Oil Company) to open LOLC Service Centres at the fuel stations. This is considered to be strategic in servicing the SME and the Micro Finance sectors and the company has already opened 11 such service points. Further strengthening the collections processes, the company entered into a strategic alliance with Citi Bank and Bank of Ceylon (BOC) to facilitate rental collections at BOC branches. This will give the customer the convenience of payment while enhancing the collection efficiency for the company.

The Company in its pursuit to strengthen the funding sources to support business expansion, secured attractive long term funding lines from both local  financial institutions as well as many foreign bilateral and multilateral funding institutions, including a strong pipeline for the coming year. LOLC continues to benefit from and further strengthen the unique relationship with foreign funding institutions with superior performance and facilitating the effective execution of their developmental goals in developing countries in the region.

LOLC, as a consistent value creator to its customers, introduced several products and service innovations during the year, including Shari’ah complaint (Islamic) financing options, Western Union Money Transfers, extended service hours including 24 hr savings operations at selected points, and many more. An ATM solution is about to be launched for the convenience of the savings customers.

Progressive IT solutions have enabled the company to provide the customers innovative products and service propositions, whilst giving the company significant benefits from effective resource management.

 Having achieved success in the SME sector, the Company has entered the next level of the Micro Finance sector and has already made significant progress in this sector during the past financial year. Today, LOLC positions itself not only as a financier in the SME and the Micro sector, but intends to realize the full potential of the group’s mission of “assisting those driven by enterprise to reach greater heights, through innovative, personalized and wide ranging financial solutions” by being a catalyst of sustainable development in the micro, rural, sectors with focused strategies aligned to develop the agriculture, farming, dairy community with technical assistance in addition to financing options.

The Company’s current and future strategy of developing these sectors especially in the East augurs well with the Nation’s long term vision for rural development. The Company’s focus in the Micro Finance sector also contributes well to the global trend in supporting the rural and micro sectors to build self sustenance to face the impending food crisis. 

The regional expansion strategy adopted by the Company in the previous year with the investment in PRASAC Micro Finance Institution in Cambodia contributed positively and significantly, facilitating the exchange of knowledge and expertise in Micro Finance business while opening new business avenues for the Company to grow in the region.
In line with the long term strategy for growth, the Company recently acquired the controlling interest of Commercial Leasing PLC, which will reinforce leadership in the leasing sector. The Company is of the view that this latest addition will facilitate synergistic benefits to the whole group and will strengthen its position.
The growth strategies adopted by the company with new investments made in CLC and in the region, will position the Company to serve the broader customer segments in the SME and Micro sectors while facing the ever changing challenges posed by the external environment and to deliver strong growth in both top line and bottom line in the coming years. 


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