Commercial Leasing records impressive growth

The Central Bank of Sri Lanka (CBSL) has approved the granting of a licence to Commercial Leasing Company Limited (CLC) to operate as a Finance Company.

This approval will require the holding company Lanka ORIX Leasing Company (LOLC) to divest 10 percent of its shareholding in compliance with CBSL's mandatory listing rules for Finance Companies.

As a result, the company name is expected to be changed to Commercial Leasing & Finance Limited in the near future while retaining the brand as CLC.

Group Managing Director/CEO, LOLC Group Kapila Jayawardena said CBSL's new guidelines for Finance Companies require CLC to be listed as a finance company, and they are confident that shareholders of CLC will benefit from LOLC Group's commitment to steer CLC towards rapid expansion with volume growth with a strong foundation to build a deposit base through the established branch network. Since LOLC took over ownership of CLC three years ago, in May 2008, the Company's performance has seen consistent and strong growth in profitability.

The lending book of CLC which includes leases, hire purchases, loans, factoring and micro financing, rapidly grew from Rs. 8.9 b as at March 2009 to Rs. 24.9 b by Sept end 2011, recording a growth of 180%, which reaffirms our commitment.

LOLC has been able to build on the strong foundation with shareholders' funds seeing an impressive growth of 280 percent to reach its current value of Rs. 6.4 b.

The total assets of CLC grew by 176 percent to reach its current value of Rs. 26 b. Profit before tax for the year ended 31.03.11 reached Rs. 741 m and the Company has already reached a PBT of Rs 2.9 b for the six months ended September 2011.

Fitch Ratings Lanka has affirmed CLC's National long-term rating at 'A-(lka)' with Stable Outlook. CLC's sound asset quality, profitability and the strong capital base will position the Company as a strong finance company in the future.

Despite the rapid growth of its lending portfolio, the company has maintained its asset quality at superior levels to the industry average, where the company's gross NPL ratio as at March 2011 was at 0.8 percent and the net NPL ratio was at a negative 1.9 percent.