LB Finance to assemble cars?

Witnessing a 150 percent growth in net profit this year, LB Finance is looking at assembling cars together with getting into condominiums and housing as long term plans.

“Presently we are doing well with our current portfolio in leasing and hire purchase, but in the long term we have mapped out several ideas, including assembling cars in Sri Lanka,” Sumith Adhihetty, Managing Director LB Finance told The Sunday Times FT.

The Company’s net profit shot up in 2006 to Rs.120 million, from Rs.48 million in 2005. “The 150 percent growth in profit is due to efficient management and stringent cost control,” Adhihetty said.

However, he said that despite the excellent results this year, LB Finance is acutely aware of certain constraints on our credit finance business. “The greatest of these is a shortage of funds for lending, which has kept interest rates and spreads high and creates constraints in mobilizing funds,” he added.

Adhihetty further explained that as a finance company, LB Finance is forced to borrow from banks and re-lend at a higher rate of interest to the customers. “This puts the banks at an advantage, allowing them to attract more and better customers. Although we have been able to offset this advantage through better marketing and active customer focus, it remains a constraint on the growth of our credit finance business,” he said.

He said that in terms of deposit mobilization, the company has reached the number three position. He said the leasing market in the country has risen to Rs.65 billion from Rs.45 billion witnessing a 44 percent growth and the company is set to target more business this year.