Sri Lanka’s leasing industry valued at over Rs 65 bln

Sri Lanka’s leasing industry is valued at over Rs 65 billion with a significant part of this coming from the leasing of motor vehicles, according to a leasing industry specialist

Deputy General Manager Leasing, Nations Trust Bank (NTB) , Keshini Jayawardena, said that currently there are 20 specialised leasing companies, 11 licensed commercial banks, 8 specialised banks and 27 finance companies offering leasing facilities to the public, with automobile companies too setting up their own leasing companies in a form of forward integration in the supply chain.

Jayawardena, who in a press release referred to NTB’s newest subsidiary Nations Leasing and its work, said the industry needs to be developed for long term sustainability of the industry. “The focus on motor vehicle leases has to some extent skewed the growth of the leasing industry in Sri Lanka when compared to other markets such as South East Asia, Europe and the US,” she said.

In more mature markets the leasing portfolio is more diverse in the types of assets being financed and also in terms of the types of leasing products that are on offer. “We need to grow the market in order to develop the leasing industry, for instance machinery and equipment leasing as well as maritime and aircraft leasing. We need to explore how leasing can fuel the growth of businesses in Sri Lanka with quick credit approval, tax efficiencies and repayment flexibility as well as cash flow improvement,” she said.

Nations Leasing is the result of a recent merger between Mercantile Leasing Limited (MLL) and NTB.

“We like to think that this merger with Nations Trust Bank in Sri Lanka creates a fusion of time-tested experience and young dynamism which will make the Nations Leasing brand a force to be reckoned with in the leasing industry,” said Jayawardena. “Our new slogan ‘A Meeting of Minds’ relates both to our goal of meeting the specific requirements of our customers through tailor-made leasing solutions, as well as to the synergies we can expect through this merger with Nations Trust Bank.”

Discussing why banks have begun diversifying into leasing, Jayawardena said that increasingly banks were looking for new ways in which to expand their business and generate extra revenue. “Banks are aiming increasingly to provide a ‘one stop shop’ for all the financial needs of their customers”. She said in a world where one’s bank will do everything from offering deposits to paying the utility bills of their customers, it makes sense for leasing too to be added to a bank’s portfolio. “At present this is particularly important when banks in Sri Lanka are looking to develop their retail and SME customer segments, though in other markets leasing plays an important role in the financing of large corporate businesses too,” she said.

Nations Leasing will provide leasing facilities to its SME customers as an engine of growth of their businesses, as well as to personal banking customers looking for vehicle finance.