LOLC outperforms rest of leasing sector

Lanka Orix Leasing Company PLC (LOLC), currently on a buying spree and looking for new investments, has outperformed the rest of the specialized leasing sector with a 40 percent growth in the year to March 31, 2007, much higher than the average 16 percent growth in the rest of the sector.

LOLC, with the induction of a new CEO in Kapila Jayawardene, former country manager of Citi Bank, recently took a majority stake in Touchwood and is speculated to be looking at other companies for prospective stakes.

Fitch Ratings Lanka in a press release said that the net growth in LOLC's overall loan portfolio was high during the 12-month period while the three year compounded annual growth rate was 24.8% for the company since FYE04. Loan growth continued at a high annualised pace of 33.8% during Q108 in contrast to the slowdown witnessed across most of the companies in the leasing industry.

Fitch said it was affirming the 'A(lka)' National rating of Lanka Orix Leasing Company PLC (LOLC) with the outlook remaining stable. LOLC's rating reflects its relatively strong financial profile and its established customer franchise in the leasing industry.

LOLC's gross non-performing loans increased in nominal terms during FY07 and Q108, as experienced across the sector. The gross NPL ratio increased to 2.8% and 5.5% at FYE07 and Q108 respectively, from 1.7% at FYE06. However, LOLC's gross NPL ratio remain lower than that of its peers, largely due to the company's year end write off policy of NPLs in arrears for over 24 months, supported by its strong collection efforts, Fitch said.