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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » LBF Controls 13% Of Industry Assets

LBF Controls 13% Of Industry Assets

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1LBF Controls 13% Of Industry Assets Empty LBF Controls 13% Of Industry Assets Sun Dec 02, 2012 12:13 am

sriranga

sriranga
Co-Admin
Following is an interview which our staff reporter Faraz Shauketaly had with the Managing Director of LB Finance plc (LBF) Sumith Adihetty. LBF is a company controlled by business magnate Dhammika Perera.

Question (Q): What are LBF’s main sectors in percentage terms?

Answer (A): Today LBF is one of the leading players in the licensed finance companies (LFCs) sector and is estimated to be the second largest in terms of asset base. LBF is fully involved in the financial services sector where we invest in transportation, agriculture, micro finance, trading, manufacturing distribution and tourism. The company’s product portfolio mainly includes deposits, leasing, hire purchase (HP), gold loans, micro finance, factoring and working capital management and Islamic financing.

Leasing and HP carry around 60% of the total lending portfolio and the balance 40% represent Debt Factoring, Mortgage Loans, Gold Loans, Vehicle Loans, etc.

Q: How has LBF increased its deposit base?

A: By now LBF had won the hearts of Sri Lanka’s public because it has proved its strength by way of its outstanding performance and results. Our quality standards and unparalleled results are being always justified by our bottom line. At the end of the day depositors too have been enabled to reap the benefits of the company.

Q: How much is your deposit base now?

A: Currently the deposit base has surpassed Rs. 33 billion.

Q: How many branches do you have?

A: Expansion of our reach opens the doors for unlimited opportunities when reaching customers. We have 121 distribution channels of which 86 operate as fully fledged branches.

Q: How much of market share of finance company business do you estimate is for LBF?

A: Market share of 13% in terms of asset base.

Q: What is LBF’s commitment for the development of the country’s financial sector?

A: The company has a habit of continuing innovation in designing new financial tools which it has done during the last few years. At the same time we do try to make disciplined effective financial policies such as credit criteria processes and control systems. Our expansion into the North and East occurred within weeks after the end of the conflict, hence our presence undoubtedly contributes to activate livelihood initiatives and bring these war-torn areas into the mainstream of development.

Q: Do you have exposure to agribusiness? How much of the company’s business is aimed at that sector?

A: The company provides financial assistance to customers engaged in sectors such as agriculture and fisheries which are exposed to changes in the climate. Considering these factors we have designed a special repayment model for such customers who are exposed to adverse results arising from climate change.

Q: Can you state your plans and successes to date regarding LBF’s presence in the former conflict areas?

A: The rapid expansion of our distribution channels which includes branches and gold loan centres saw the largest expansion drive in 2011/2012 in the LFC sector with a total of 20 new distribution channels opened across the country. The company also recorded another first by opening 10 distribution channels; the highest number to be opened within a single day. Four of the 10 channels were opened in the North and East (NE) reflecting the high growth potential which we have identified in the backdrop of the post war economic revival that is taking place in these areas. The company recruited more than 150 for the distribution channels in NE who were deprived of most necessities due to the prolong war.

Q: Why does a customer choose a finance company over a traditional bank?

A: What we believe is the service provider should go to the customer. Thus our distribution channels take all our products to the very doorstep of every community across the nation. That is why we are vigilant and keen in assessing customer requirements within a short period of time.

Q: It appears from a layman’s point of view that there is very little money in people’s pockets. In that context how are your loans performing? What level is bad debt at?

A: It’s not how you manage your company, it’s how you advice customers. We have a customer base that comes from a very sound financial background. Therefore the customer is in a position to face any fluctuations that arise from their financial position. Due to the strategy of maintaining high quality portfolio, we are able to manage the non-performing loan ratio below the industry average.

Q: What plans do you have for expansion of LBF?

A: LBF believes that there is no end to expansion. But when expanding we are mindful “and sustainable” since our expansion process is steady and manageable.

Q: What are the positive aspects you see in the last budget?

A: Since there were no major changes in the tax regime or policies, we are optimistic that the year ahead is “challenging” and fruitful.

Q: Would you as a banker have liked to see some “better” incentives? If so what are those?

A: We value a higher depreciation allowance for equipment and machinery which we lease to customers engaged in sectors such as agriculture and fisheries as a concession from the budget.

Q: Where in the market do you see LBF in four years time?

A: We have a dream of being South Asia’s no 1 “financial supermarket” and we are confident that we shall break new frontiers in the financial services sector. We have already identified a few locations overseas to open up distribution channels. Thus now we follow a concept of “One Stop Shop” that meets diverse financial requirements of customers of all age groups.

Q: Why do you believe LBF is as successful as you state? What difference has LBF made to the customer who seeks the services of a finance company?

A: I strongly believe in practical solutions rather than theories. At the same time I believe you can’t deliver practical solutions if you do not know your theories and basics. “World’s best batsmen speak with their bats.” Similarly our innovative timely strategies have made customers comfortable. That is why even with a competitive environment LBF has won the hearts of all Sri Lankans.

Q: How positive are you about Sri Lanka’s economy?

A: I personally as a principle do not grumble about factors beyond my control, however I am positive about my company’s and the country’s future as my nature and habit are facing challenges and to be optimistic.
(faraz@thesundayleader.lk) (Pics: mediacolombo/Chanaka Ratnaweera)
http://www.thesundayleader.lk/2012/12/01/lbf-controls-13-of-industry-assets/

http://sharemarket-srilanka.blogspot.co.uk/

2LBF Controls 13% Of Industry Assets Empty Re: LBF Controls 13% Of Industry Assets Sun Dec 09, 2012 6:27 pm

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sumith Adihetti initially started with the financial performance. “We finished last year with over Rs 1.5 billion profit after tax. This is a sizable increase over last year. He said the Central Bank after ‘auditing’ LB finance’s record books and all transaction details had issued a statement that LB finance was a ‘low-risk’ Finance company. This is due to our transparent and honest financial policies in all our dealings with the customers and with the Central Bank.

Smith Adihetti said LB Finance which was initiated by Lewis Brown’s over 40 years ago was bought over by Dammika Perera nine years ago. With that the management changed and I too joined them. Our aim is to reach Rs 2 billion profit in the financial year ending 2013 March which would be a 25% growth. He further said, “This is an ambitious goal which I believe we can achieve”.

He said “everyone needs to agree that at present the economy is not in a stable condition” but he was very positive and claimed, “with our effective and aggressive marketing efforts achievement of this is possible despite difficult market conditions”. Further he said when I started there were only three branches and after that I embarked on the branch expansion programme. He pointed out that currently they had branches spread to all parts of the island. He said, “Last year we opened 25 branches, and in the Jaffna peninsula alone it was five branches”.

We offer 50 to 60% of the vehicle value as finance. This could change depending of the financial stability of the client. When asked about the credit ceiling imposed on banks by the Central Bank he said, “It was good for the finance companies before the vehicle import tax was imposed. But most of the finance companies do not have money. Last year we had 2.5 million deposits but our target is Rs 1 billion.” In response to a question he said “Most of the deposits are short term therefore there is a mismatch”. But showing optimism he said, “Most of our deposits are renewed which means customer confidence is good”.

He did not forget to talk about the profits. “We finished last year with over one and a quarter billion as profits after tax which is a sizable increase over previous years. He said the Central Bank after ‘auditing’ LB finance’s record books and all transactions details, had issued a statement that LB finance is a ‘low risk’ Finance company. This is due to our transparent and honest financial policies in all our dealings with the customers and with the Central Bank.

He further said Central Bank had also indicated that they were the second in the market as far as the finance companies were concerned. In response to a question he said that currently the market leader was Central Finance and that they wished that they could reach the top very soon.

Sumith stressed that LB Finance had all the conventional finance company products with no plans to expand into unknown areas and that the company was currently concentrating on what was available in hand only. Describing the market growth further he said, “We are the market leaders in pawning business and our inland money transfer service is very popular among the public and has become the most convenient and safe mode of money transfer.”

He said their staff strength was 1750 and that this would rise to 2000 by end of the year. The current tax increase on import of vehicles has adversely affected their business was his opinion. The move to increase vehicle import tax has affected the entire industry very badly. We have been doing very well in the leasing business and the drop currently faced is very severe. Leasing of vehicles stood at around 2000 previously and last month it was a very pathetic 300. Since new vehicle imports are less we are into more refinancing.

The Managing Director said, their fixed deposits schemes were very popular and this was another area where the company was doing well along with their ATM card which they had tied up with Sampath Bank. “We pay an attractive interest on deposits but due to the drop in the leasing business this too has dropped considerably and in a way the company was hit from both sides in this respect”.

He further spoke about the industry and said the competition was very severe and therefore they had to open more and more new branches to keep abreast with competition. “We did not have branches earlier but now we have branches in many parts of the island in order to face the competition.” He was very pragmatic in saying “the days are gone when the customer came to the branches for transact business even people from faraway places like Jaffna and Badulla, used to come to Colombo. But the present situation is totally different; we go to the consumer, and this is an effective way of braving the completion successfully”.

Sumith did not forget to mention about the Central Bank of Sri Lanka which he said was performing a valuable service to the whole industry by way of issuing directives and timely supervision.

When asked about the possibilities of diversifying the business he said, “We like to do only the core business associated with finance companies and we do not want to go to unknown areas and burn our fingers”.

“At present only the hotel and construction industries doing well. Business from the North and East is good but we are careful in lending. People like our presence in Jaffna and the eastern province. We have a very good clientele. We have just started factoring and have done only Rs 1 billion business up to now. We are slow in progressing because we only go for the reputed suppliers as this is a new area of business for us.”





3LBF Controls 13% Of Industry Assets Empty Re: LBF Controls 13% Of Industry Assets Sun Dec 09, 2012 9:03 pm

Fresher


Moderator
Moderator
Harry82 - reminder (again)
Please post the source along with the articles

4LBF Controls 13% Of Industry Assets Empty Re: LBF Controls 13% Of Industry Assets Sun Dec 09, 2012 9:11 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
npp wrote:Harry82 - reminder (again)
Please post the source along with the articles

As usual he may try to pretend that he is the author.

Here is the link

http://www.ceylontoday.lk/24-8534-news-detail-aims-to-reach-rs-2-billion-turnover-by-2013.html

5LBF Controls 13% Of Industry Assets Empty Re: LBF Controls 13% Of Industry Assets Sun Dec 09, 2012 9:38 pm

Fresher


Moderator
Moderator
@Redbulls wrote:
npp wrote:Harry82 - reminder (again)
Please post the source along with the articles

As usual he may try to pretend that he is the author.

Here is the link

http://www.ceylontoday.lk/24-8534-news-detail-aims-to-reach-rs-2-billion-turnover-by-2013.html

A very shoddy work even at copy-pasting. Left out some parts of it.
If you can, post this article with the link. I'll remove the duplicate.

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