Sinhaputhra Finance net profit up 27.8% to Rs. 50.1 m in nine months

Sinhaputhra Finance Ltd. has completed yet another successful first nine months during 2006/07.

AGM (Finance and Planing) Ms. Chitrani Jayasooriya said that the company's net operating profit before provisions for the period has increased by 43.6% to Rs. 112.0 Mn compared to the corresponding period 2005/06.

During the period under review, the company's net profit after making provision for loan losses and taxation has registered an increase of 27.8% to reach Rs. 50.1 Mn. The company maintained a steady growth in financial performance over the years and continues to consolidate at this stage, according to her.

The satisfactory financial performance has been supported by a 25.7% growth in Finance Leasing and loan operations over the corresponding period in 2005/06. The funding of the business has been mainly through public deposits with the balance coming through Bank funding.

The total public deposits held by the company as at end of December 2006 stood at Rs. 2051 Mn, 33.3% growth over that of Rs. 1,538.1 Mn held as at March 31, 2006. Total Assets increased by 38% from Rs. 2,499.8 Mn as at March 31, 2006 to Rs 3,450 Mn approx. as at December 31, 2006, according to Ms. Jayasooriya.

Ms. Jayasooriya said that the interest income for the period under review has registered a 39.1% growth over the corresponding period in 2005/06 in which interest expenses increased by 49% exerting pressure on the company's interest margins.

The net interest income for the period registered a 26.3% growth. The company has maintained a significant growth in Business Loans and Personal Loans coupled with a noteworthy growth in Finance Leases that contributed towards this satisfactory performance, she said.

The company has focused in strengthening business operations considerably to ensure further growth in interest income.

When questioned on the ability of the company to maintain the same momentum of growth in business and in financial performance, she said that measures have been taken by the Corporate Management to maintain interest margins at present against the background of an increasing trend in interest rates on public deposits and bank facilities in this competitive business environment.

Ms Jayasooriya said that the year 2006/07 should be another good year for the company that will ensure growth in shareholder's funds in addition to the maintenance of a satisfactory dividend in line with that of 2005/06 (25% Gross).Senior Manager (Treasury), Nalin Jayasundara said that the company raised nearly Rs.450 mn through securitisation of lease Receivables for investment in Finance Leasing business with the assistance of the company's bankers during this period.

A critical analysis of interest rates on Bank facilities and short term deposits from the public revealed that the company could benefit more in terms of interest expense by switching from Bank borrowings to public deposits in today's context and it is the view of the Corporate Management that the company concentrates more in this area.

"We are confident of achieving the planned results for the year 2006/07 to strengthen our public deposit base and growth in business which will guarantee solid financial results," said Jayasundara.