THE Merchant Bank of Sri Lanka (MBSL) celebrated its 23rd anniversary with impressive financial performance recording a net profit of Rs.124 million, the second highest in the MBSL's history.

MBSL Managing Director Sunil G. Wijesinha said that having recommenced profit making in 2002 MBSL was still being dragged down by its balance sheet which showed almost Rs.1.5 billion in accumulated losses.

"By 31 December with the completion of the capital reduction exercise, the balance sheet got a new face, showing a much stronger position.

With the increasing profitability and many systems and procedures falling into place, the 23rd anniversary was celebrated by the staff on an upbeat note with improved morale and full of confidence about the future", Wijesinha said.

He added that the Rs. 124 million in 2004 came largely from the leasing and hire purchase business and also from some good recoveries. "Compared to the 71 million earned in 2003 the profit has increased by 74% in 2004. The Group profit was Rs.131 million compared to Rs.81 million in 2003".

The turnover has increased by 12% to Rs.434 million and net interest income by 6% to Rs.249 million. On account of the lower volumes of trading in the stock market, the share of profit from MBSL's associate company Lanka Securities Limited has declined. Shareholders funds have increased to 740 million compared to 616 million in 2003.

Wijesinha said that the MBSL's annual report speaks of the revival, of its capital market activities and the continued strengthening of its leasing and hire purchase business.

In addition to strengthening its business activities MBSL has been continuing the refining of its processes. One of the most significant changes in its policies has been the new and more stringent provisioning policies.