Vallibel Finance profits soar in June quarter on new loans

Vallibel Finance PLC reported higher top and bottom line performances for the three months ended in June (1Q22), aided by higher loans, margin improvement and lower credit costs from the same period in 2020, showing that the company was able to successfully manage the challenges stemming from the pandemic. 

Vallibel Finance reported earnings of Rs.38.70 a share or Rs.569.5 million for the quarter under review, compared to earnings of Rs.11.75 a share or Rs.172.9 million in the corresponding period in 2020, when the virus-induced lockdowns had a deeper bearing 
on the company. 

The company reported a net interest income of Rs.1.28 billion for the three months, up by a robust 56.8 percent from the same period in 2020, reflecting that the company had its loan book ticking, despite the economic restrictions, while the repricing of its deposits under low interest rates stretched its margins as seen from the 22.5 percent drop in interest expense. 

This is despite the company mobilising fresh deposits worth of Rs.2.09 billion to Rs.34.26 billion. 

Meanwhile, the company, with assets of Rs.57.39 billion, gave loans worth of Rs.1.79 billion, logging a robust 5.3 percent growth for the quarter while its leases grew by Rs.200 billion, translating into a 1.5 percent growth. 

Further, the company largely maintained its asset quality at much better levels than the industry average, with a gross non-performing loans ration at 4.74 percent by June-end, whereas the industry ratio was at 11.30 percent as of March 2021, according to the latest industry data available. 

Meanwhile, the company provided Rs.119.27 million for possible loan defaults and other losses, significantly down from Rs.203.28 million in the year earlier period, in a reflection that the economic hardships confronted by its borrowers weren’t as worse as at the beginning of the pandemic in 2020.  

The company also provides a proxy for how the medium to large-scale licensed finance company sector fared amid the third wave of the pandemic. 

The stronger earnings propelled the company’s return on equity, the widely watched gauge for industry attractiveness for its shareholders to an annualised 27.46 percent by June-end, compared to 23.57 percent three months ago. 

The company’s capitalisation levels and the liquidity level remain above regulatory minimums and adequate enough to sustain the growth momentum. 

 Vallibel Investments Private Limited, the investment vehicle of billionaire businessman Dhammika Perera, together with him held a 73 percent stake in Vallibel Finance by June-end.