People’s Leasing & Finance reports subdued results for 2Q

People’s Leasing & Finance PLC reported muted performance for the September quarter as the company experienced a de-growth in loans and leases while the provisions for doubtful loans rose as the economic malaise in the wider economy hit the country’s largest standalone non-bank lender. 

The People’s Leasing & Finance group, which has its own general insurance company and a few other subsidiaries, reported earnings of 88 cents a share or Rs.1.39 billion in the July-September quarter (2Q20), compared to 80 cents a share or Rs.1.27 billion reported for the same period, last year. 

The company’s share ended 1.78 percent or 30 cents lower at Rs.16.60 at yesterday’s market close. 

People’s Leasing & Finance became the first non-bank lender to kick start the third quarter earnings season of FY19, which is not expected to be much different from the subdued earnings seasons in the first and second quarters in 2019. 

Meanwhile, for the six months ended September 30, 2019, the company reported earnings of Rs.1.29 a share or Rs.2.05 billion, compared to the earnings of Rs.1.47 a share or Rs.2.33 billion reported for the same period, last year. 

The growth in the top line or the interest income was also muted as there had been a complete absence in the growth in the loans and leases. 

The interest income during the quarter grew 6.5 percent year-on-year (YoY) to Rs.8.48 billion while the growth during the six months was 9.2 percent to 
Rs.16.8 billion. 

The loans and receivables portfolio, which contains loans to both retail and institutional clients, fell by Rs.2.5 billion to Rs.154.5 billion during the six months to September 30. 
Growth in the Sri Lankan economy sputtered during the last five years due to toxic politics, which trumped economics while the Easter attacks this year killed even the remaining animal spirits in the economy. 

At People’s Leasing & Finance, the provisions for possible bad loans or the impairments rose to Rs.1.66 billion during the six months to September 30, up from Rs.1.12 billion YoY. 
The company raised nearly Rs.12 billion in deposits but the bulk of them were used to settle the loans to banks, due to the absence of
lending opportunities. 

Analysts say People’s Leasing & Finance is a bellwether for the rest of the companies in both the bank and non-bank sectors, which are yet to release their interim accounts for the quarter
under review. 

State banking giant People’s Bank holds 75 percent of the shares of People’s Leasing & Finance while the state-managed private sector pension fund, the Employees’ Provident Fund, has a 5.43 percent stake of the company.