Central Finance posts Rs 2.9 b PAT
Central Finance Company Plc ended the financial year on a strong
note, with total assets growing by 17 percent to reach Rs 39.0 billion
(Rs 33.3 billion in 2010) and an operating profit before financial Vat
and income tax of Rs 2.9 billion, an increase of 67 percent over the
Liabilities grew at a lower pace as the loan book was largely funded
through the robust cash flows from core operations. New borrowings were
utilized to meet shortfalls to support advances or manage interest rate
mismatches. In spite of the significant growth in advances, liquidity
remained satisfactory with liquid assets of Rs 312 m in excess of
statutory requirements, undrawn facilities of Rs 3.5 billion at year
Operating expenses were consistent with the expansion in business
(increase of 13 percent or Rs 258 million).
"Shareholders' funds grew by Rs 1.54 billion and stood at Rs 9.4
billion for the Company, and at the group level, crossed a significant
threshold to reach Rs 10.9 billion, Managing Director E Wijenaike said.
Fitch Ratings Lanka (FRL) affirmed the 'A+(lka)' rating taking into
consideration the good financial profile of the company.
The agency also assigned an 'A(lka)' rating to a subordinated debt
issue of Rs 500 million with a tenor of five years.
With business volumes of Rs 20.23 billion as against Rs 9.7 billion
previously, the Company performed exceptionally well, achieving a growth
of 108 percent in disbursements for the year. The results were achieved
through continued penetration into rural markets supported by new
The increase of market share in medium and heavy commercial vehicles
with a growth of 88 percent and a strong 137 percent year on year growth
in car finance contributed to this expansion," he said.
The company maintained its conservative approach to credit risk while
pursuing strong lending growth.
The rigorous credit evaluation process enabled the company to further
improve its asset quality measures in terms of both gross and net
Non-Performing Loan (NPL) ratios.
Asset quality was better than market, with gross non-performing loans
to total advances (inclusive of operating leases) on the core business
at 2.6 percent and net NPL of 0.3 percent. Provision cover increased to
70 percent from 64.6 percent in the previous year. Industry wide Gross
NPL ratios in 2010 for registered finance companies, banks and
specialized leasing companies were 9 percent 5 percent and 5 percent
respectively (CBSL Annual Report). Recovery of debts previously written
off amounted to Rs 71.2 million as against Rs 70.7 million last year.