First half net profit tops Rs 3.9 billion:

LOLC gets huge profit

LOLC Group pre-tax profits for the first half of 2010/11 soared to Rs 4.5 billion with post tax profits of Rs 3.9 billion. Compared with the previous year, pre-tax profits grew by 370 percent. The company’s acquisitions made in the previous financial year contributed well to the bottom line along with other income, which increased by 215 percent to reach Rs 2.7 billion at the end of the second quarter.

The revenue of the group grew by 500 percent over last year, mainly contributed by the trading companies in the Brown and Co PLC cluster.

The trading profits complemented well to the group’s financial services related business income of Rs 5.8 billion, a 22 percent growth over last year.

The borrowing costs continued to come down in line with the sliding interest rates with the group raising funds at attractive rates. This is mainly due to LOLC’s ability to source long-term funding from foreign multilateral and bilateral agencies at attractive rates contributing to the reduction in borrowing costs.

The borrowing cost for the six months was three percent lower than last year and was Rs three billion. This decrease is despite the increase in the quantum of borrowings. Balance sheet growth was substantial with total assets reaching Rs 98 billion, a 31 percent growth over last six months. Aggressive growth in the lending business increased the total advances to Rs. 47 billion, a 48 percent growth over last year.

To support this aggressive growth in lending especially in the North and East, and branch expansion, the Group raised additional funding at attractive interest rates increasing the total borrowing by 29 percent over the last six months.

LOLC’s exponential growth, expansion strategy and strategic investments has positioned the Group on a strong footing for a steady stream of medium to long-term sustainable profitability and this is already evident from the record increase in profits when compared with last year same period. Aggressive growth in executions in the lending business over the last 12 months especially in the rural areas are contributing well to the bottom line of LOLC, Lanka ORIX Finance Co. Ltd (LOFC), Lanka ORIX Micro Credit Ltd (LOMC) and Commercial Leasing Company Ltd (CLC), the main lending companies of the Group.

The company is gearing up to start off the two new operations namely LOLC Insurance and LOLC Securities. LOLC obtained a composite licence for insurance and is expected to commence business in both Life and General insurance in early next year.

The Group made a strategic investment into the construction sector, by acquiring 20 percent of Sierra Holdings and 20 percent in Sierra Constructions at a cost of Rs 1.6 billion.