Record performance by LOLC in 1Q2020/21
View(s):LOLC has recorded its highest ever post-tax profit (PAT) of Rs. 37.2 billion for the first quarter (ending June) 2020/21, compared with Rs. 5.6 billion recorded in the same quarter in 2019/20, in a period which included the part-sale of its Cambodian investment in PRASAC to South Korea’s largest Commercial Bank – Kookmin Bank, for US$603 million.
The LOLC group received the first tranche of $422 million for this transaction with the balance of $181 million being due in 2022. The group recorded a gain of Rs.43 billion arising from the sale, it said in a media release this week.
LOLC made its maiden investment outside Sri Lanka, acquiring an 18 per cent stake in PRASAC in 2007 and gradually increased its stake to 70 per cent in 2017. With the concluded transaction, LOLC will continue to hold a 21 per cent stake in PRASAC.
The top line of the group grew to Rs. 32 billion, a 12 per cent growth over last year while the interest income from its financial services businesses recorded an increase of 16 per cent to Rs. 22 billion.
“However, the economic and business challenges arising from the COVID-19, increased pressure on the financial services sector, with increasing NPLs. The group made conservative provisioning for bad and doubtful debts, with Rs.10 billion being set aside for this purpose. These provisions are well above the regulatory requirements in each country. Based on regulatory recommendations, each company offered moratoriums and deferred payment plans to its clients considering the negative impact on such clients caused by the pandemic,” the statement said.
Trading sector revenue increased marginally. Both insurance businesses recorded strong growth in the three months compared with the same period last year. The higher level of provisioning along with fixed costs and marginal increases in operating expenses which continued throughout the period of lockdown causedthe operating businesses to record a negative result of Rs. 4.7 billion compared with a positive Rs. 1 billion, last year.
The group said it will continue to follow a conservative provisioning policy despite seeing a positive trend in client engagement for collections, with businesses gradually resuming their operations after a period of lockdown.