Empowered by over Rs.3bn capital SMB Leasing gears for higher growth

Stronger now with over Rs.3 billion in capital, SMB Leasing PLC is gearing for higher growth with improved prospects for some of its core businesses as well as seeking fresh opportunities via new products. 

The company benefited from a fresh capital infusion of over Rs.2 billion recently, following a rights issue. Incidentally, it was the second rights issue of SMB within the past 11 years, signalling a reinforcement of shareholder confidence. 

Apart from returning to profitability in 2021, SMB has also succeeded in having its capital above the Central Bank requirement (including for licensed finance companies) of Rs.2.5 billion, propelling itself within the top 10 in terms of stated capital and top 20 as per core capital, respectively in the NBFI sector, industry analysts confirmed. 

The company believes that with increased stated capital, in addition to providing leverage for a significantly higher return for shareholders and facilitating portfolio expansion plans, it would qualify to be on par with licensed finance companies in terms of core capital. The company is primarily engaged in providing finance leases, mortgage loans, personal loans and gold loans. 

The rights issue proceeds will be utilised to expand the lease, loan and pawning portfolios of the company. Since this can be done  with the present organisation structure with no additional overheads being incurred, the incremental yield from the portfolio expansion will directly have a positive impact on the net profit, which will increase shareholder return in 2021 and beyond.

In the June 30, 2021 quarter, SMB Leasing’s net interest income rose by 133 percent to Rs.28 million, while the operating income rose by 108 percent to Rs.33.7 million. In the first half of the current financial year, after tax profit was Rs.49 million, a complete turnaround from a loss of Rs.9 million in the corresponding period of last year.