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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Gold Loan and LFIN, How they manage risk

Gold Loan and LFIN, How they manage risk

Go down  Message [Page 1 of 1]

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
There is so much talk in the forum about gold loans and the risk companies like SAMP/LFIN has.

I extract certain paragraphs from LFIN report on Gold loan issues and risk management.

Open for discussion.


"
From the Company’s perspective gold
loans are a highly lucrative segment.
Given the sentimental value attached to
gold and the high level of redemption,
whilst the easily liquefiable nature of the
asset further reduces its risk exposure.
The short-term nature of the asset also
results in improving the Company’s asset
liability maturity mismatch.

The strategies were redefined in the
latter part of the financial year as the
Company forecast a plunge in the gold
market. Therefore the Company reduced
the advance percentages as a prudent
measure.

Enhancing the recovery process through
automated reminders direct to customers
and a dedicated call centre to follow
through on these reminders.


We anticipated a decrease in the gold
prices and reduced the duration mainly to
one month loans against gold. This has
reduced the negative impact of gold prices
to the Company.

As the strategy the Company was able
to shift the portfolio to one month tenor
which accounted for 46% in 2012/13
compared to 18% last year.


Overall profitability of the product was
however impacted by a sharp decline
in gold prices during the year. The
loss in value of the security as well as
losses upon disposal of unredeemed
gold required the Company to make an
impairment provision amounting to
Rs. 220.26 million for the year 2012/13.


We have identified the importance of
monitoring and forecasting gold price
movements, on a more consistent and
accurate basis. Also, underwriting and
monitoring of this segment will be
strengthened.


With the strengthening of the business
line the Company is confident that gold
loans will continue to be a key growth area
in the coming year."







Slstock Note :

1) Gold flucuated from $1550 to 1800 in 2012/2013 year for LFIN.
So for about 13 % fluctuation , impairment increase( as above) was Rs 220 Million.
Total impariment is 310.68 million.

2) From March to June 2013 drop will be about 13-15% ( if it stay around $1400-1350 )

With the precautions they have taken , what do you think the loss impact might be .

Anyway this gold issue might not be bad as one expects after the risk management for finanical yeat 2013/14.


3) Gold prices are expected to drop further. But if they gradually drop, the issues for these companies might
be controllable with risk management.




Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Also

Company currently manages the gold
price risk by adopting the following
strategies;

• Quicker re-pricing cycle: Company
as a strategy grants for shorter
periods allowing it to re-price its cost
promptly.
• Frequent revision of Loan-To-Value
(LTV) ratio: Company practices a
process of revising advancing ratio to
allow for market value fluctuations

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
i already Know.
Dynamic entrepreneur, Dhammika Perera, do very well. Smile

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
[img]Gold Loan and LFIN, How they manage risk  New_pi13[/img]

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
The strategies were redefined in the
latter part of the financial year as the
Company forecast a plunge in the gold
market. Therefore the Company reduced
the advance percentages as a prudent
measure.

Company reduced the advance from Feb 2013.
Therefore Coming 1st quarter also they will publish strong result
santa

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
So what ablout ALLI which has less exposure.


@Harry82 wrote:The strategies were redefined in the
latter part of the financial year as the
Company forecast a plunge in the gold
market. Therefore the Company reduced
the advance percentages as a prudent
measure.

Company reduced the advance from Feb 2013.
Therefore Coming 1st quarter also they will publish strong result
santa

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Did you see the following

"As the strategy the Company was able
to shift the portfolio to one month tenor
which accounted for 46% in 2012/13
compared to 18% last year."

But Alli didnot mansion about that

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Look ALLI annual report is not out.

They maybe effected next quarter and so will LFIN be .

But the issue is you are trying to demote ALLI without real knowledge to collect at Rs 800( you said so you will).
Don't do that. If you falls to Rs 800, you are in luck. Don;t try to use the forum to push LFIN and demote ALLI.


ALLI has 15% gold exposure while LFIN has 24% .


Becareful as your posts are not impartial in many peoples eye.


I also have a bit of LFIN but I won;t say they won;t be effected by gold . All I am saying is these companies take risk management and we should not panic people .

If you can sya you ideas using facts state them.





@Harry82 wrote:Did you see the following

"As the strategy the Company was able
to shift the portfolio to one month tenor
which accounted for 46% in 2012/13
compared to 18% last year."

But Alli didnot mansion about that

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
??



Last edited by Harry82 on Sat Jun 08, 2013 2:47 pm; edited 1 time in total

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@Harry82 wrote: i Promote CFIn

Thread is giving a good or bad exposure about the topic, but we can see someone accepting his real role in this forum - promotion.



Last edited by Redbulls on Sat Jun 08, 2013 2:44 pm; edited 1 time in total

Harry82

Harry82
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
you r correct Redbulls

rainmaker


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Well the most affected listed entity is PLC ........ come back down to 12 where did you think you were going Razz

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@Harry82 wrote:you r correct Redbulls

Pissu ahh Laughing

Why cant u do a proper analysis and defend ur ideas rather than bringin cock-n-bull stories? Evil or Very Mad

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