First-ever historic profitability in SL’s corporate sector
Sri Lanka’s most valuable and globally diversified financial conglomerate, the LOLC Group, posted a record-breaking performance for the financial year ending March 31, 2021, achieving unprecedented bottom line results of Rs. 57Bn in Profit Before Tax (PBT), and a Profit After Tax (PAT) of Rs. 53Bn – a first for any corporate in the country.
By achieving profits on this significant scale, the Group once again consolidated its position as the top most profitable diversified corporate in the country, three years in a row – establishing LOLC as one of the largest Micro and Small & Medium Enterprises (MSME) platforms in the world.
This stunning performance by LOLC resulted in Rs. 28Bn being recorded as Profits Attributable to the Equity Holders of the Parent company. The Group results denote an impressive Earnings Per Share of Rs. 59.01 compared with Rs. 22.93 recorded in the previous year.
Whereas, the total comprehensive income was Rs. 81Bn out of which Rs. 37Bn is attributable to the Equity Holders of the Parent company. Furthermore, the total attributable comprehensive income per share was Rs. 77.84. The resultant Net Assets Value per Share as at the year-end was Rs. 286.23 compared to Rs. 194.72 reported last year, demonstrates the exceptional value creation by the Group during the concluded financial year.
The story of LOLC’s rise into an elite blue-chip within a span of 40 years is nothing short of awe-inspiring, surpassing competitors who have been in existence for over a century. A pioneering leasing company established in 1980, in collaboration with ORIX Corporation of Japan and International Finance Corporation (IFC), LOLC, revolutionized the future of MSMEs in Sri Lanka and rose in stature as Sri Lanka’s largest Non-Banking Financial Institution (NBFI).
Having established a high performance microfinance business model, LOLC rapidly exported its expertise to global markets such as Cambodia, Myanmar, Indonesia, Philippines, and Pakistan in Asia; as well as Zambia and Nigeria in East and West Africa, bringing prosperity to people at the bottom of the pyramid. In addition, the Group has established its footprint in the Maldives and Sierra Leone in the arena of Non-Financial Services.
In Sri Lanka, the LOLC Group diversified into agriculture and plantations, leisure, renewable energy, construction, manufacturing and trading, information services, as well as research and innovation over and above its flagship financial services. All of these businesses recorded an upward trend in profitability in 2020/21, despite the adverse effects of COVID-19 being felt by Sri Lanka’s economy through 2020, coupled with weak GDP growth in the preceding year.
Despite the global economic downturn experienced during the period, a strong pipeline of multilateral and bilateral funding has been available to LOLC and its operating companies both locally and globally – a testimonial to the confidence these institutions have placed in the LOLC Group due to its strong and unblemished track record and the potential for growth even during turbulent times.
LOLC’s financial services have brought about life-changing financial inclusion in MSMEs in Sri Lanka, empowering frequently marginalized communities to build a better future for their families – driving women’s empowerment and financial independence by encouraging their entrepreneurial ambitions. Overall, the LOLC Group’s Financial Services achieved a Rs. 17.3Bn as bottom line despite allowing for a strong level of risk mitigating provisions amounting to Rs. 30Bn for bad and doubtful debts on a very conservative basis against Rs. 17Bn last year.
Livelihoods of people in all sectors have been badly affected by the COVID-19 pandemic and at the request of the regulators of each country, the Group’s Financial Services Companies have extended moratoriums to affected customers – extending a safety-net to those in need.
LOLC’s finance companies in Sri Lanka experienced a strong level of deposit inflows despite the all-time low interest rates. The flagship finance company – LOLC Finance PLC (LOFC) – with a Total Assets base of Rs. 170Bn, recorded PAT of Rs. 4.4Bn. Commercial Leasing & Finance PLC (CLC) with a Total Assets Base of Rs. 77Bn also recorded strong performance, posting a PAT of Rs. 2.2Bn in 2020/21. Meanwhile, with a Total Assets Base of Rs. 19Bn, LOLC Development Finance (LODF) PLC recorded a PAT of Rs. 155Mn.
Seylan Bank succeeded in delivering a steady PAT of Rs. 3Bn for FY2020. Deposits increased by 9.9% and advances increased by 4%, whereas the CASA Ratio stood at 33%.
LOLC’s overseas financial services entities made strong contributions to the profitability of the Group in 2020/21 with LOLC Cambodia leading the way with a US$ 45 Mn in PAT with the Total Assets base exceeding over US$ 1 Bn. In Cambodia, LOLC continues to hold a 97% stake in LOLC Cambodia – the fourth-largest microfinance company in terms of market position, and the second most profitable microfinance institution in Cambodia after PRASAC.
LOLC Myanmar Microfinance Company Limited has now become the fourth-largest among the 176 MFIs, with an asset base of US$ 175 Mn, a portfolio of US$ 126 Mn and a growing deposit book of US$ 20 Mn. LOLC Myanmar has seen exceptional performance in FY2020/21 by posting a profit of US$ 3 Mn as PAT, and envisages strong growth prospects amidst the atmosphere of a large unbanked population.
In 2017, LOLC ventured into Pakistan by investing in Pak Oman Microfinance Bank (POMB), a joint venture with the Islamic Republic of Pakistan and the Sultanate of Oman, which is now poised for rapid growth in a country with a population of over 200 million – offering attractive industry fundamentals.
Tapping into other neighbouring emerging markets, LOLC invested in the Philippines – a country with a population of 110 million – through LOLC ASKI Finance and LOLC Bank Philippines – a thrift bank in 2019.
In the year under review, the Group made its first finance sector investment in the African region by acquiring a controlling stake of FinaTrust Microfinance Bank in Nigeria – a west African nation with the largest population in the continent of 206 million.
The Group commenced operations in Zambia by incorporating LOLC Finance Zambia as a greenfield operation – which currently operates through six branches.
The global expansion strategy for the financial services sector remains a key focus, with plans being made for expanding into more markets in both Africa and Asia.
LOLC General Insurance Ltd. and LOLC Life Assurance Ltd. demonstrated strong resilience against the unprecedented impacts of the pandemic and other socio-economic adversities.
LOLC Life Assurance registered a GWP of Rs 3.2 Bn – the first Life Company in the industry to achieve this milestone in less than 10 years – and posted a growth of 21% in GWP, backed by a robust growth of 59% in first year premiums: the highest new business growth in the insurance industry. Meanwhile, LOLC General Insurance achieved Rs. 6Bn in Gross Written Premium in 2020 in less than 10 years – a first for Sri Lanka.
Courtyard by Marriott to debut in Sri Lanka
Marriott International is set to introduce the Courtyard by Marriott brand to Sri Lanka, this year. The hospitality giant has signed an agreement with Colombo City Centre Partners (Private) Limited, part of the Abans Group, for this 164-key hotel, expected to open in late 2021, – according to Business Traveller India.
Located in the heart of Colombo city adjacent to the Beira Lake, Courtyard by Marriott Colombo will feature 164 modern guest rooms and suites. The rooms will be equipped with functional work area, smart amenities, and high-speed internet access, making it an ideal stay option for business and leisure travellers, the Indian magazine stated.
There will be two dining venues – an all-day dining restaurant serving a combination of western dishes, Asian favourites and a host of local delicacies as well as an adjoining Lobby Lounge decked with a full-service bar and a quick-bites menu.
Other amenities include a 24-hour fitness centre, an outdoor swimming pool and three meeting rooms.
Rajeev Menon, president, Asia Pacific (excluding China), Marriott International said:
“We are delighted to strengthen our Marriott Bonvoy portfolio of hotels in Sri Lanka with today’s signing. The signing underscores our long-term commitment to Sri Lanka as a strategically important market, offering the potential to grow our brands and provide customers with more choices.”
Kiran Andicot, regional vice president – Development, South Asia, Marriott International commented, “We are very pleased to collaborate with Abans Group, who share our vision to offer smart, intuitive service and high-quality accommodation in Sri Lanka.”
Further elaborating on the collaboration, Aban Pestonjee, chairperson of Abans Group said:
“We are happy to have forged this strategic business alliance with Marriott International and are keen to see our relationship grow from strength to strength. We eagerly look forward to the opening of the first Courtyard by Marriott Hotel in Sri Lanka. We are excited to have Marriott International with us at Colombo City Centre.”
Virtusa appoints Santosh Thomas as CEO
Virtusa Corporation, a global provider of digital strategy, digital engineering and IT services and solutions that help clients change and disrupt markets through innovation engineering, yesterday announced the appointment of Santosh Thomas as its new Chief Executive Officer (CEO).
Virtusa’s Board of Directors appointed Santosh as successor to the company’s founder, Kris Canekeratne, who announced his transition from the business in May 2021. Santosh joins Virtusa during a time of significant growth and follows the recent appointment of Sander van‘t Noordende to the position of Chairman of the Board of Directors.
Santosh brings more than 20 years of leadership and industry experience to Virtusa. Most recently Santosh served as President of Global Growth Markets at Cognizant where he managed a business with revenues over $4 billion and built multiple billion-dollar businesses in Europe and Asia Pacific in Banking, CommTech and Products & Resources. In his new role, Santosh will help Virtusa drive growth in key markets and continue to be recognized as an employer of choice.
“On behalf of the entire company and the Board of Directors, I would like to thank Kris for his more than two decades of leadership,” said Sander van‘t Noordende. “I would also like to welcome Santosh who brings a stellar track record of client service, leadership, and proven success. Santosh has the vision and experience to take Virtusa’s deep heritage in digital engineering to new levels of growth.”
“I am deeply honored to join Virtusa at this exciting time for our employees, clients and partners,” said Santosh Thomas. “I have admired Kris and Virtusa for fostering a culture of innovation and distinguishing itself as a global leader in helping customers tackle their unique digital transformation challenges. Virtusa has a great brand reputation, an impressive roster of strategic partners, and is well positioned for sustained growth.”
“When I founded Virtusa 25 years ago I had a vision to build a global powerhouse in digital engineering services. And we did just that,” said Kris Canekeratne. “I leave with the confidence that the company and its leadership team have never been stronger and its opportunities have never been greater. I welcome Santosh Thomas to the CEO role and wish him the best in his efforts to lead Virtusa through its next phase of growth.”
Also announced yesterday, Denise Warren has joined Virtusa’s Board of Directors and has been appointed Chairperson of its Audit Committee. Ms. Warren recently retired from her position as Chief Operating Officer (COO) of WakeMed Health & Hospitals, and serves on the boards of Brookdale Senior Living, Computer Programs & Systems Inc., and Rockroom Insurance Group.
No double standards please, on govt’s vehicle import ban: CMTA
Meanwhile, on June 9, The Island published its front page lead story ‘Covid time bonanza: Luxury SUVs for MPs coming after all- LCs opened before Cabinet rescinded its own decision’.
The Ceylon Motor Traders Association (CMTA) has expressed its concerns on the decision the government has taken to import 400 vehicles – including 227 luxury SUVs – to a value of Rs. 3.7 billion through the Bank of Ceylon. The Government reversed its earlier decision to cancel the order, citing the fact that the Letters of Credit (LCs) had been already opened and “as the opening of Letters of Credit meant guaranteed payment, Sri Lanka faced the prospect of being blacklisted if a unilateral decision was taken” as per Minister Keheliya Rambukwella’s explanation to the press.
The CMTA notified the government of the same issues and repercussions on international trade as a result of unilaterally dishonouring 216 LCs of its members that had been opened prior to the import ban in March 2020. Totalling Rs. 5.2 billion, these include a considerable number of vehicles ordered by permit holders such as doctors and government officials who are at the forefront fighting the pandemic, some of whom had already sold their existing vehicle, anticipating their new vehicle to arrive shortly. Is it fair to keep these permit holders on hold indefinitely while new luxury SUVs are imported for MPs during the import ban?
Due to these LCs being dishonoured, a total of more than 14,000 vehicles comprising 10,780 Motorcycles, 2640 trishaws and 537 Cars specifically ordered for Sri Lankan market conditions were prohibited from being imported.
The vehicle import ban imposed last year has taken a toll on vehicle buyers by constricting the market at a time when the need for personal transportation is more acute. To make matters worse, the resulting imbalance of demand vs. supply has caused prices of used vehicles skyrocket within a short time span, and has led to unscrupulous activities at the expense of the consumer, such as odometer tampering.
Speaking on behalf of the CMTA, Chairman Yasendra Amerasinghe said, “Considering the rampant increase of COVID-19 cases at this time, with various potent variants of the virus spreading throughout the island, personal mobility represents the safest option for citizens who have no choice but to travel. The CMTA very much agrees with Minister Rambukwella’s statement that cancellation of confirmed LCs will affect the credibility of our banks and country. We strongly urge the government to apply the same standard to LCs for vehicles for government servants including doctors, and the general public as it has applied for luxury SUVs for MPs. We hope that there would be no double standard.”
Furthermore, the CMTA mentioned that it had been reminding the government of a proposal for Quota that It had submitted in March, at the request of the President’s Secretariat, to which no response had been given. This proposal was based on a minimum volume of vehicle imports for the industry to survive until the import ban is lifted.
Concerns were also raised as to how this purchase had been carried out without an open tender, with queries as to whether it complies with government procurement guidelines.
Founded in 1920, the Ceylon Motor Traders Association (CMTA) is affiliated to the Ceylon Chamber of Commerce and is widely accepted as the voice of the Sri Lankan Automotive Industry.
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