Leasing industry in upward trend

Sanjeevi JAYASURIYA

The country’s leasing industry is doing well and this upward movement will continue despite the recent changes in the economic environment.

The leasing industry gained momentum due to supportive economic conditions in the country and we are optimistic that the growth will continue further. Though the increase in the fuel prices, exchange rate and anticipated rise in the interest rates will have an adverse effect the industry could sustain the current trend, People’s Leasing Company Limited Chief Executive Officer and General Manager D.P. Kumarage told Daily News Business.

The government policies are in place to maintain the economic growth and this will compliment the generating of business opportunities for industries such as leasing. The development initiatives currently underway will provide demand for more services where machinery and vehicles are involved, he said.

The interest rate increase will be an additional cost on customers with the possibility of an increase in the vehicle prices too. There will be a dip in the market and the best would be ‘wait and see’ policy. However, it is too early to comment on the outcome, he said.

The leasing industry recorded a significant growth of 120 percent in 2010/2011 and it expects a substantial growth in 2012 as well.

People’s Leasing Company Limited (PLC) recorded Rs 3.14 billion net profit for the nine months ended December 31, 2011 as against Rs 1.36 billion for the corresponding period in 2010. The net profit increase was 130 percent. With an asset base of Rs 79 billion the company recorded the best NPL ratio of less than one percent where as the industry average is 6 to 7 percent. It has 25 percent market share and has maintained the leadership for the past decade in an industry of 70 players.

The leasing industry comprises three categories namely commercial banks, specialized leasing companies and finance companies. PLC claims of above 35 percent portfolio under the category of specialized leasing companies. It has 52 branches and 130 window offices across the country.

“Our core strength is quality service delivery, team work and corporate governance where effective management policies are followed. The diversity of the Group in to related ventures such as insurance, fleet management, property development and micro finance generate sufficient volumes of business within the group,” Kumarage said.