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LOLC at the helm of corporate sector due to its impressive performance

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LOLC Group (LOLC), the premier blue chip conglomerate, concluded another financial year on a high note as per the results for the year ended March 31, 2020.

LOLC posted an impressive Rs.19.8 billion Profit after Tax (PAT) for the year in comparison to Rs.19.6 billion PAT in the last year, becoming the most profitable listed entity in Sri Lanka for two consecutive years. In a short span of time, LOLC has truly emerged as a “Sri Lankan global player” having operations in over 10 countries.

While the Group performance was affected by local externalities, such as the Easter Sunday attack, the subdued economic growth and the political instability in FY19/20 that resulted the company to record dips in the net interest income and hikes in impairment charges, LOLC has been able to enjoy its stellar performance largely based on the earnings stemming from its overseas financial operations and the gain on a bargain purchase of Rs. 5.4 billion from the acquisition of the largest sugar production plantation company in Africa. Moving forward, LOLC is well set to realise the financial synergies generated from the PRASAC divestment through realigning the capital position of the Group.

Established 40 years ago, LOLC has spearheaded the Small & Medium Enterprise (SME) lending and microfinance revolution in Sri Lanka and the region. Excelling on a national level, LOLC has now established itself as a leading microfinance institution in the countries which it operates.

With its financial strength and the perfected micro finance business model in the region, the Group is now well-positioned to expand its operations beyond Asia to the African continent where a substantial opportunity lies in serving a large Bottom of the Pyramid population. Overseas expansion has not only offered LOLC diversified revenue streams with increased financial stability, but also has added resilience with a well-spread risk profile.

LOLC already made its debut to Africa by acquiring a microfinance bank in Nigeria in October 2019 and by starting LOLC Finance Zambia as a green field project. In FY 2020/21, LOLC will focus on consolidating its existing businesses while pursuing promising investments in Africa and Asia for long-term value creation.

The Group announced the board’s decision to sell its 70% stake in PRASAC to the South Korean KB Kookmin Bank for a consideration of $603 million in January 2020. LOLC received the relevant regulatory approval in March 2020 and concluded the transaction on April 13, 2020. PRASAC claims $3.3 billion in assets, $2.7 billion in portfolio, $1.8 billion deposits and $133 million Profit before Tax (PBT) for the 12 months ending March 2020.

Despite the sale of PRASAC, LOLC still has a foothold in the fastest growing Southeast Asian country via LOLC Cambodia, the fourth largest Microfinance Institution (MFI) in terms of portfolio size. The company has recorded an impressive performance with a 57% YoY growth of its earnings to conclude the year.

The group owns 97% of LOLC Cambodia that has an asset base surpassing $1 billion, a gross loan portfolio of $857 million, a deposit base of $501 million and a recorded profit of $34.6 million. With its superior process efficiencies and the right product mix, the company now leads the industry in terms of profitability.

Venturing into Myanmar in 2013 as a greenfield operation, LOLC Myanmar Microfinance Company Limited has now become the third largest among the 176 MFIs in the country with an asset base of $109 million, a portfolio of $77.8 million, and a growing deposit book of $13.8 million. LOLC Myanmar has seen an exceptional performance in FY2019/20 with over 94% YoY growth in loan book, total assets and deposits.

In 2017, the Government of Pakistan and the Sultanate of Oman invited LOLC to take up the major shareholding of their joint venture – Pak Oman Microfinance Bank, in recognition of LOLC’s outstanding contribution to the microfinance community. The Group ventured into Indonesia in 2018, acquiring the controlling interest in PT Sarana Sumut Ventura (SSV), expanding its global footprint. SSV is now well-placed to capture the industry potential in a country that has a massive Micro, Small & Medium Enterprises (MSME) market and over 100 million Bottom of the Pyramid population.

Tapping into other neighbouring emerging markets, LOLC invested in the Philippines through LOLC ASKI Finance and LOLC Bank Philippines (a thrift bank) in 2019. These entities collectively account for $11.8 million loan portfolio. In the year under review, the Group made its first finance sector investment in the African region by acquiring a controlling stake of FinaTrust Microfinance Bank in Nigeria, the country with the largest population in Africa.

Today, with the financial sector representation in eight countries along with promising investments in Asia and Africa in the coming years, LOLC has successfully established itself as a strong global financial conglomerate. With this standing, the Group is poised to be a global financial catalyst with a multi-currency, multi-geographic microfinance and SME platform in the future.

In spite of the challenging and unexpected external shocks, LOLC Finance PLC (LOFC) continued to hold its market leadership position amongst the Non-Banking Financial Institutions (NBFIs) in the country with an asset base of Rs.192 billion, a portfolio of Rs.134 billion and deposits of Rs. 99 billion. The company posted Rs. 3.9 billion PAT in the year under review. LOFC as the leading impact lender, holds the largest pool of Development Finance Institutions (DFIs), guiding their respective development goals for Sri Lanka.

The capital and the wide array of technical assistance provided by these DFIs through LOFC have transformed the grass root levels of the economy. Continuing the Group’s legacy of expanding strategic international alliances, LOFC signed a loan agreement with Swedfund, the Swedish Government’s Development Finance Institution to promote financial inclusion and gender equality.

In a statement about the annual performance of the Group, Group Managing Director/CEO Kapila Jayawardena said, “2019/20 has been a difficult year due to externalities affecting most industries, but we are pleased with our strong performance this year, with a Group PAT of Rs. 19.8 billion which is largely contributed by our strategic foreign ventures. With this standing, we are proud to be the most profitable listed entity for the second consecutive year. With a timely global expansion strategy, well diversified revenue streams and a dynamic workforce in place, we will ambitiously look forward to stride ahead with consistent performance during these turbulent times.”

 


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Unlimited music streaming platform in Sri Lanka

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SLT-Mobitel, the nation’s ICT and Telecommunications Service Provider recently partnered with Spotify, to mark their launch in Sri Lanka. Spotify is a paid premium music streaming app which allows subscribers to listen to music to their hearts content. Both, SLT-Mobitel Post-Paid and Pre-Paid customers will now be able to enjoy Spotify by activating a monthly recurring subscription or one-time subscription plan and access unlimited music streaming and downloading facilities.

The subscription charges will get added to the user’s customary billing, where payment will be deducted in real time. Starting from the payment date, the user will be able to access Spotify and download their favourite songs, for the next 30 days. Users who sign up for their first monthly subscription will receive an additional one month, courtesy of Spotify. The one-month subscription plan is not applicable with one-time subscription plans. SLT-Mobitel data rates, depending on the user’s respective broadband charges, will apply.

Spotify also has some exciting features that will provide SLT-Mobitel customers with the opportunity to listen to ad-free music, access millions of uninterrupted music under one platform, play any song they like, anywhere they go, and also be able to enjoy their music offline.

SLT-Mobitel customers can select their preferred premium package under four categories; Individual, Duo, Family, Student. Each category has recurring and non-recurring plans. After one month of free streaming, the package will activate once the offer period terminates. While both, the Individual and Student premiums are limited to one account user, the Duo package offers two accounts and the Family premium is accessible through six accounts. To view Spotify plans, users can log on to https://spoti.fi/3aLWvce

 

 

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Sri Lanka using ‘sovereign power’ over economy: CB Governor

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by Sanath Nanayakkare

Anyone conversant with the elements of a political economy would know that Sri Lanka is using its ‘sovereign power’ to manage the different dynamics of the economy in a sustainable manner, Professor W. D Lakshman Governor of the Central Bank said on Wednesday.

“Some critics are saying that we adopt a so-called modern monetary theory. That’s not the case. In fact, Sri Lanka is using its sovereign power in a number of economic aspects to honour its external debt repayment commitments as well as to reduce its debt burden in the medium term as well as achieve resilient growth in the medium to long term, he said.

“We make policy decisions to boost our gross foreign reserves, meet our external debt servicing, to facilitate monetary expansion, to boost our GDP growth, to strengthen our current account balance and manage our domestic and external economic variables in a sustainable manner. This is not a modern monetary theory. This is an age-old tool used by central banks around the world when the circumstances demand it, he said.

“Certain trade-offs will be necessary when dealing with an economy which has a big fiscal gap to bridge. There are efforts to push Sri Lanka towards the IMF again which would in turn have influence on our policymaking. We have taken policy measures to stabilize the economy and we have adequate reserve levels to meet our debt repayments. Meanwhile, we are in negotiations with overseas central banks and multilateral agencies to further boost our reserve level and it would materialise within a matter of weeks,” he noted.

“One of the tools the Central Bank has introduced is in respect of repatriation of export proceeds into Sri Lanka and conversion of such proceeds into Sri Lankan rupees in order to strengthen the foreign exchange situation of the country,” he said.

The Governor made these remarks while delivering the keynote speech at a webinar organised by the Veemansa Initiative led by its Managing Director Luxman Siriwardene – the former Executive Director of Pathfinder Foundation.

The webinar revolved round the topic ‘External debt situation in Sri Lanka: Are we heading for a resolution or crisis?’

Professor Sirimal Abeyratne, Prof. Sumanasiri Liyanage, Dr. Nishan de Mel and Dr. Ravi Liyanage were the other speakers on the panel.

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CSE on the rebound; indices close positive

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By Hiran H.Senewiratne 

CSE produced signs of a rebound yesterday with both indices closing positive, though turnover remained low. Central Bank Governor W.D Lakshman’s recent statement on managing foreign reserves gave some boost to the market yesterday, stock market analysts said.

 The index experienced a zigzag movement within the early hours of trading; thereafter, it recorded a slight up-trend as it reached its intraday high of 7,439. Later, the market witnessed a down-trend at mid-day, followed by a sideways movement and closed at 7,372, gaining 43 points during the month of February, market sources said. 

It is said the banking sector dominated turnover with a contribution of considerable  parcel trades in Sampath Bank, Commercial Bank  and HNB.

Further, the Commercial Bank’s impressive quarterly results during the recent turbulent period also built investor  confidence. Commercial Bank was able to register a18 percent net interest income when other banks were reporting a decline. Its share price increased by Rs. 3 or 3.5 percent. On the previous day, its shares started trading at Rs. 85 and at the end of the day they moved up to Rs. 88. Due to the positive growth results, the bank announced a Rs. 4.40 dividend per share, plus a Rs. 2 script divergent for every share.

Further,  Sampath Bank shares also appreciated in both crossing and retail. In crossings its shares appreciated by Rs. 1.At the end of the day they moved up to Rs. 154.50. In the retail market, its shares moved up by Rs. 2 or 1.3 percent. Previously, its shares fetched Rs. 154 and at the end of yesterday they moved up to Rs. 156.  

Amid those developments, both indices moved upwards. The All Share Price Index went up by 104.48 points and S and P SL20 rose by 67.78 points. Turnover stood at Rs. 3 billion with four crossings. Those crossings were reported in Sampath Bank, where 3.9 million shares crossed for Rs. 602.2 million, its share price being Rs. 154.50, HNB 375,000 shares crossed for Rs. 39.4 million, its shares traded at Rs. 105, Pan Asia Power 9.5 million shares crossed for Rs. 33.2 million, its shares traded at Rs. 3.50 and Access Engineering 1.2 million shares crossed for Rs. 28.2 million; its shares traded at Rs. 24.

In the retail market top five companies that mainly contributed to the turnover were, Expolanka Rs. 450 million (10 million shares traded), JKH Rs. 205 million (1.3 million shares traded), Browns Investments Rs. 199 million (34.9 million shares traded), Sampath Bank Rs. 191 million (1.2 million shares traded) and Dipped Products Rs. 137.7 million (2.8 million shares traded). During the day 101 million share volumes changed hands in 18046 transactions. 

During the day, Expolanka, the biggest contributor to the turnover, saw its share price appreciating by Rs. 6.20 or 15 percent. Its share price quoted on the previous day was Rs. 41 and at the end of trading yesterday it moved up to Rs. 47.

Sri Lanka’s rupee quoted wider at 193.50/195.50 levels to the US dollar in the spot next market on Thursday while bond yields remained unchanged, dealers said. The rupee last closed in the spot market at 194.50/195.00 to the dollar on Wednesday.

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