Aug 20, Colombo: The first quarter of the financial year 2020 is already promising for LOLC as it surpassed $ 1 billion in equity to become one of the first corporates in the country with a billion-dollar equity base.
Notwithstanding the deteriorating macroeconomic conditions in Sri Lanka, LOLC thrived to showcase uninterrupted financial stability with an asset base of Rs. 1.14 trillion along with an equity base of Rs. 190 billion.
The Group recorded an impressive PBT of Rs. 12 billion and PAT of Rs. 10 billion in the first three months of the current financial year. This includes a negative goodwill of Rs. 5.2 billion from the acquisition of one of the largest sugar production plantation companies in Africa, reaffirming the Group's strategy in international investments.
The Group's local financial services companies - LOLC Finance PLC, Commercial Leasing and Finance PLC, and LOLC Development Finance PLC - took a proactive approach in facing the prevailing macroeconomic challenges in Sri Lanka over the past 18 months. A conscious decision was made to control lending and focus more on recoveries and improving portfolio quality. As a result of this short-term strategy, there had been a swift positive impact on portfolio quality as NPLs have been maintained well ahead of industry averages, with Group level NPLs showing a marked improvement from the previous two quarters. This improvement is significant given the magnitude of the combined portfolio under consideration of Rs. 689 billion.
The regional expansion of the Group has also delivered extremely strong results, diversifying and balancing the exposure LOLC had to the local market.
LOLC was the first financial institution in Sri Lanka to venture offshore in microfinance with its maiden investment in Cambodia's largest MFI- PRASAC.With an ROE of 28%, a portfolio of $ 2.4 billion, a deposit base of $ 1.6 billion and a significant contribution to the Group's bottom line, PRASAC offers substantial return on investment in dollar terms through the Group's 70% holding in PRASAC.
Although a relatively new entrant to the Cambodian MFI performers, LOLC Cambodia (LOCAM) has now positioned itself as the most profitable MFI in Cambodia with an ROE of 32%, ROA of 4.2%, and the fourth largest portfolio and deposit base of $ 621 million and $ 354 million, respectively. Steered by LOLC Group's considerable expertise and guidance in microfinance, in less than five years, LOCAM has risen up the ladder to become the second contributor in profits within the Group's MFI portfolio, with a 15% share in Group PBT for the quarter ended in June. The Group owns 97% of LOLC Cambodia.
LOLC Myanmar, a greenfield operation and the first of its kind from Sri Lanka in Myanmar, has now become the third largest MFI in the country with an asset base of $ 64 million, a portfolio of $ 50 million, and a growing deposit book of $ 8 million. Through this rapid course of growth, the company has now gained attention from the prominent global investors due to its unique business model reflected through the quality portfolio and the growth potential in store with the liberalization of the Myanmar market.
LOLC's role in the microfinance arena had been endorsed by many independent organizations. LOLC Finance PLC was the first in Sri Lanka and the 13th organization globally to obtain the client protection principle (CPP) certification of SMART campaign (a global initiative which exists to ensure strong client protection practices in the microfinance industry), and LOLC Cambodia was the first in Cambodia to be certified on CPP together with its platinum-grade rating on the Global Impact Investing Rating system for their impactful business conduct. LOLC Myanmar, again, is the first in Myanmar out of 174 MFIs to obtain the coveted CPP in their profile.