People’s Leasing & Finance posts Rs.796mn profit for 1Q

The country’s largest finance company, People’s Leasing & Finance PLC (PLC) posted a Rs.796 million net profit for the 1st quarter of 2018, down 25.9 percent compared to the same quarter last year, as the firm continued to feel the sustained monetary policy tightening by the Central Bank over the past 18 months.

Earnings per share were Rs. 0.54, down from Rs. 0.70 year-on-year (YoY). At end of trading on Friday, PLC shares were trading at Rs. 17.10, down 1.16 percent compared to the start of trading.
Group-level interest income for the quarter increased 29.3 percent YoY to Rs. 6.45 billion, while interest expenses increased 46.3 percent YoY to Rs. 3.54 billion, approximately 90 percent of both of which were from the finance and leasing operations.

PLC’s bank borrowings, which had increased at a faster pace than the larger customer deposits over the past several years, put pressure on interest expenses during this quarter. Finance companies have a large portfolio of fixed interest products, which cause interest income to lag behind expenses during monetary policy tightening.

The firm, which also owns People’s Insurance PLC, saw Rs. 953 million in net earned premium being contributed by its insurance subsidiary, up 11.2 percent YoY.

Impairment charges for loans and receivables were recorded at Rs. 549 million, up sharply from an impairment reversal of Rs. 1 million.

Profit before income tax was down 26 percent YoY to Rs. 1.15 billion.
The group asset base improved 0.4 percent to Rs. 157.97 billion, with loans and receivables 0.4 percent to Rs. 134.91 billion compared to March 31, 2017.

In PLC’s liabilities front, attempts at lowering interest costs saw borrowings from banks falling 6.3 percent, while dues to customers increased 7.8 percent compared to the previous quarter. Net assets per share increased to Rs. 16.37 from Rs. 16.36 in the same period.

Operating income from the leasing and hire-purchase business for the 1st quarter fell to Rs. 648 million from Rs. 921 million YoY. Interest income from the the segment increased to Rs. 3.47 billion from Rs. 3 billion YoY.

Operating income from loans fell to Rs. 442 million from Rs. 471 million YoY, while interest income increased to Rs. 2.37 billion from Rs. 1.53 billion YoY.

The insurance business operating profits fell to Rs. 212 million from Rs. 292 million YoY.
The government owns over 84.5 percent of shares in PLC through various state financial institutions and two retirement funds. Neon Liberty Lorikeet Master Fund LP owns 4.39 percent of shares in PLC.