Facts to consider.........
*LFIN registered an exceptional 83.2% YoY earnings growth for 4QFY11 surpassing
Rs. 1bn in earnings for FY11. 60% YoY growth recorded in net interest income on the
back of strong volume growth posted in the leasing, hire purchase and gold loans
segments drove earnings higher. This led the company to achieve an ROE and ROA of
39% and 3.6% for FY11 compared to 32.2% and 3.2% in the last year respectively.
*leasing and hire purchases
-Total advances doubled during the year to reach Rs.24bn dominated by leasing and
hire purchases. The leasing and hiring segment’s performance was promising during
FY11 with the portfolio growing by 56% YoY exceeding Rs. 16bn, mainly due to
increased demand for vehicles following the duty reduction coupled with lower interest
rates that increased affordability of vehicle financing products.
-The gold loan segment’s performance was also outstanding during the year registering
a loan book growth of 81% compared to the FY10 figure, given the appreciation of gold prices along with the expansion of pawning centres, targeting especially the untapped markets in the Northern and Eastern provinces. Over Rs.2.5bn gold loans were advanced during the year. This resulted in an increase in revenue from gold loans of 60%YoY, which contributed 22.4% of the company revenue for FY11 and 29.6% of operating profits.
*loans and advances
-which are mostly comprised of term loans and mortgage loans, showed a strong 89% YoY growth.The loan book growth was primarily funded by borrowings and deposits which grew by 231% and 57% respectively from FY10 figures. The company raised over Rs.1.9bn in borrowings and mobilised over Rs. 7.1 deposits during the year. A major portion of the borrowings were in the form of bank borrowings and deposits were mainly comprised of fixed deposits. Renewal rates of deposits remained over 80% during FY11. Interest expense grew by only 7% YoY due to lower rates despite a sharp increase in interest bearing liabilities during FY11.
*Other operational income
-doubled during the year mainly due to fee based activities as a result of increased lending operations. Capital gains from investments accounted for Rs.63.5m of operating income.
*Given the strong demand for vehicles and stable interest rates, the demand for vehicle financing products will remain robust for the coming year as well. Gold loans should continue to grow given lower interest rates and due to an anticipated appreciation of gold prices. In addition, the company expects to broaden its product portfolio by introducing ‘factoring’ during FY12.
*The company is expecting to add 50 centres (including branches and pawning centres) during FY12, especially in rural areas (as currently branches are concentrated around Colombo) with which its network will be extended to 140. This should lead to higher operating expenses during FY12.
*Deposits are expected to post a considerable growth due to increased reach and high
renewal rates and will be the major source of funding going forward.
from a well reputed firm.....
no buy,sell or hold implications,think before jump...