Commercial Leasing and Finance maintains impressive growth
Commercial Leasing and Finance Ltd. (CLC) posted impressive growth in
profits before tax for the year completed, recording Rs. 3.2 billion and
a corresponding profit after tax of Rs. 2.9 billion.
The growth in profits was a direct result of the increase in interest
income which grew by 51% to reach Rs. 4.4 billion from previous year’s
income of Rs. 2.9 billion.
|Kapila Jayawardena, Group
Managing Director/CEO of
|Krishan Thilakaratne, Director/
CEO of Commercial
Leasing and Finance Ltd.
The company was able to achieve this level of performance through its
strategy of steady portfolio growth backed by effective collections
leading to lower non-performing loans ratio. The portfolio recorded
steady growth over the year increasing the book from Rs. 15 billion to
Rs. 21 billion.
This was a growth of 38%. The company’s collection efficiency
provided a strong backing to achieve this growth with the non-performing
loans being contained at a ratio of 1.1%, which is one of the best NPL
ratios in the industry.
The provisions made on account of bad and doubtful debts were
strengthened with additional provisions of Rs. 96 million over and above
the Central Bank requirements. The factoring business of CLC, commercial
factors too, contributed to the increase in interest income with 73%
growth over the last year to end at Rs. 795 million.
The company’s profit after tax of Rs. 2.9 billion was after providing
for Rs. 263 million as taxes, of which Rs. 205 million was for income
taxes and the balance being deferred taxation.
These profits were achieved by strategic expansion of its core
business of lending and effective management of the borrowing costs and
The operating expenses of the company increased fuelling the growth
in the business and expansion of the footprint throughout the island.
However, these increases in expenses did not negatively affect the
performance of the company, clearly demonstrating the low cost model of
CLC with a superior cost to income ratio of 20%.
CLC was able to record this level of growth through its carefully
planned growth strategy which was fuelled by the expansion in the
distribution network of branches and service centers. The company added
its 50th branch during the year and eight of these branches are located
in the North and East where CLC has had a strong presence and acceptance
among the public for several years. CLC now has a strong presence in the
regions where access to funding is offered to the company’s target
market of the lower SME and the micro sectors.
The name of the company was changed to Commercial Leasing and Finance
Ltd after obtaining approval from the CB to function as a finance
Keeping in line with the CBSL requirements to list the company, an
application was made with the Colombo Stock Exchange for listing which
was accepted and the company shares were traded subsequently.
LOLC, CLC’s parent company has a unique ability of attracting long
term foreign funding from a wide range of multilateral and bilateral
funding agencies as a result of its long standing relationship with
these institutions, and as a catalyst in channeling funding to SME and
micro sectors in achieving their developmental roles in Sri Lanka.
LOLC Group not only benefits from attractive long term interest rates
on these funding, but also enjoys technical services support, capacity
building support and global best practice knowledge transfer on good
CLC now enjoys the same benefits from these relationships and are
able to source foreign funding for its own business expansion. During
the year, the Company secured US$ 17Mn foreign borrowing from foreign
funding partners. These funding comes at attractive long term rates
which helps the Company to maintain a healthy level of cost of
LOLC Group policy is to have zero foreign exchange risk with 100%
hedging on all foreign borrowings. CLC too therefore follow this policy
which safeguarded the Company against the foreign exchange fluctuations
prevailed during the year. This policy is aligned to the mandate given
by the CBSL of zero exposure to exchange risks on foreign borrowings.
Speaking about the Company’s significant financial performance,
Krishan Thilakaratne, Director/Chief Executive Officer of Commercial
Leasing and Finance Ltd., said, “I am pleased with the performance of
Commercial Leasing and Finance.
CLC’s financial performance has spoken volumes about the Company’s
strength and stability. As a Company dedicated to reaching out to the
country’s Micro and SME sector, we have consciously maintained a good
lending portfolio which also boasts of industry best NPL ratio. With the
strategic expansion of our branch network island-wide, we are well
prepared to continue extending a range of financial solutions to the
Kapila Jayawardena, Group Managing Director/CEO of LOLC on CLC’s road
map for the future said, “CLC’s future is very clear. The Company will
look forward to steady growth in its core business of providing
financial solutions to the SME and Micro sectors to achieve a well
balanced portfolio. All activities of the company are aligned to achieve
The Company’s strong foundation of 24 years has enabled CLC to build
a solid reputation for itself. Since transforming into a Registered
Finance Company, public confidence in the Company has strengthened