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Business


LB Finance doubles profit for 9 months

The current international financial downturn has had no impact on local financial giant LB Finance, with the company doubling profits as seen by its recently posted financial figures for 2008/09. The company earned a profit before tax of Rs.419 million for the 9 months ending December 31, 2008, which is a 106% sharply up from last year’s corresponding period. The company also posted a total revenue of Rs.2.6 billion, which is an increase of 30% over the last year, and a net interest income of Rs.844 million.
Expansion of lending activities during the period saw the total assets of the company rising from Rs.10.7 billion to Rs.14.4 billion, of which 96% are earning assets. Lending chiefly comprised lease and hire purchases, of which Rs.9.4 billion was secured through vehicle leasing and hire purchase. Real estate stock amounted to Rs.221 million at the end of the period.

The company is also seen to have expanded its pawning operations and short-term advances secured on gold; company pawning advances were at a staggering Rs.1.9 billion as at 31st Dec 2008. 98% of all earning assets are said to generate regular cash flows.
Meanwhile, LB Finance has also focussed on improving its asset quality; the company’s gross NPL ratio which stood at 3.86% as at end-Dec 2007 improved to 3.39% as at 31st Dec 2008, well below the industry ratio. A more stringent provisioning directive adopted by the company which, though resulting in higher provisioning, had improved its NPL coverage. The provision for bad debts for the period thus reduced to Rs.15 million, 85% less than the Rs.104 million provision for the 9 months ending 31st December 2007.

The company’s shareholders equity was at Rs.1.2 billion as at 31st December 2008 while the core capital adequacy ratio was at 9.11%. The company’s recently oversubscribed debenture issue successfully raised Rs.450 million, in turn propelling its total capital adequacy ratio from 10.79% to a well above the required minimum 13.26%, during the period.

Forefront

LB Finance has been in the forefront of the country’s finance sphere for over 37 years and counting, each year re-establishing its place among the top three financial entities in Sri Lanka, and enticing more and more astute investors to share in its success.
Headed by Managing Director Sumith Adhihetty, a veteran in the industry, and backed by a dynamic team of young but experienced professionals, LB Finance has been able to ride every economic crisis to hit the country, and remain focussed as ever at the end of it.

The company claims to have achieved its target of expanding its portfolio amid the recent weakening economic climate by utilising high-growth areas such as its loan base, especially lease financing for 3-wheelers.
Having identified pawn advances as a positive mode of expanding its loan portfolio in the short-term, more focus has been placed on this area, and company pawning services have spread further across the island, now available through 35 pawning centres, 18 branches and the head office.

The company’s rapid expansion could also be attributed to timely staff recruitment and training, a company spokesperson said. Veteran businessman Dhammika Perera remains its largest shareholder owning a 71.33% stake as at Dec 2008, while the board, comprising of connoisseurs in finance, marketing and banking is chaired by M. B .Amarasekara.

Prudent

“A focussed approach and prudent financial principles,” says Sumith Adhihetty, Managing Director, when questioned about the strategy that complemented the company’s success during the past year. “We are a company that’s been around long enough to feel the changing winds of the industry, before they even begin, and are always ready to turn with it.” Initially the company meant to lay its focus on real estate but foreseeing the economic fluctuations, resolved instead to focus on the more pragmatic micro-level operations and pawning services. “Financial figures reaped in are therefore a result of always being one step ahead of the ever-changing economy,” he said.

Changes

Despite the changes in the management and the board in the previous years, the company continues to consolidate and expand its operations. Leasing, Hire Purchase and Pawning have remained LB Finance’s key revenue drivers and the management has leveraged on its expertise in the automotive business by the trading of vehicles. RAM Ratings has reaffirmed LB Finance PLC’s long and short-term financial institution ratings at BBB- and P3, respectively with a stable outlook for the long-term rating.

L B Finance PLC is also engaged in the acceptance of deposits, mortgage loans and other credit facilities, real estate development and related services. The company offers leasing solutions for a range of vehicles/equipment, including, private vehicles, commercial vehicles, machinery, three wheelers and motor bikes, agricultural equipment, trucks and trailers. True to its vision of taking its services to all of Sri Lanka, the company added 5 more branches in 2008, 1 in January 2009 to its rapidly expanding network, and plans are afoot to open one more in Polonnaruwa before the end of the financial year.

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BoC unveils smart investor account

Bank of Ceylon, the number one bank in the country, keeping true to its innovative spirit in introducing value added products and services to its customers, unveiled a new product, the Smart Investor Account, in the New Year.
DGM – Product & Development Banking, C. Samarasinghe explains what it is all about.

Q: Mr. Samarasinghe, under what category, will you place the new product? Are there any special reasons for introducing it?
A:
It’s basically a savings product. From the point of the Bank, deposit mobilisation is the main reason for launching this product. The market is almost saturated with savings products, but we intended to provide a novel way for our customers to save a sum which gives him a sense of worth, and which will give him a solid foundation for further investment.

Q : You mentioned a novel way. Does this new savings product differ in a significant manner with any other products under the Savings category?
A:
Yes. There is a marked difference. It’s neither a conventional savings account nor a formal fixed deposit account. It’s an Investment account, carrying the features of savings account as well as that of a fixed deposit account. It allows for periodic deposits as in a savings account, and offers a guaranteed sum as in a fixed deposit account. Being an Investment Account this product instills a sense of financial discipline, and adherence to a set plan in the prospective customers. You do not come across such discipline and planning in either a savings or a fixed deposit account.

This product directs the account holder towards a financial target; guides him through a plan and rewards him with attractive interest income On reaching the target the account holder will have a sizeable sum which he could deploy further capital enhancement either in the form of asset accumulation or investment building.

Q: It is novel indeed. In fact I would say it is a bit revolutionary. What is the name of this new product and to which segment of the market are you offering it?
A :
We have called it ‘BoC Smart Investor Account’. It is targeted towards fixed income earners who are sensitive to interest yield.

Q : What does the BoC Smart Investor offer and how does it operate?
A:
The Smart Investor comes with two maturity periods [plans] of 2 years and 3 years and offers a guaranteed sum of Rs. 50,000.00 or Rs. 100,000.00 under each plan. A Smart Investor Account could be opened with an initial deposit [1st month ranging from Rs. 10.000.00 to Rs. 1,200.00. Monthly deposits commencing from 2nd month up to the maturity date are in the range of Rs. 1,200.00 to Rs. 1,500.00.

For example Under the 3 Year Plan a prospective account holder may aim at either Rs. 50,000.00 or Rs. 100,000.as his target, and he has the option of starting the plan with an initial sum as low as Rs. 1,200. or Rs. 2,400.00. His monthly commitment will be eQUBSTIONual to his initial commitment, and on maturity he will have a sizeable, sum, either Rs. 50.000.00 or Rs. 100,000.

Under shorter version of the plan i.e. In the 2 year plan, the initial commitment may appear a bit high, but monthly commitment is very low and affordable from the stand of a fixed income earner.

I think Smart Investor provides the best option to a committed individual to save expeditiously but in an effortless manner.
Further options are available to raise the target amount up to Rs. 600,000.00 under a single plan.

Q: No doubt the options appear as smart as the Smart Investor card. Are there any eligibility requirements, any obligations?
A:
All persons above 18 years of age can open the Smart Investor Accounts, individually as well as jointly. Parents, guardians may open accounts in the name of minors. As for obligations, the accountholder is expected to strictly adhere to the investment plan and deposit his monthly commitments without fail. Non adherence would affect the target amount, but the interest yield on the account would continue unaltered.

Q: Will you enlighten us on the account opening procedures?
A:
A Smart Investor Accounts could be opened in all the branches of the Bank. BoC’s on-line Branches network consists of 304 fully fledged Branches and 125+ Extension Offices, which are spread throughout the length and breadth of the country providing easy access to customers. Accounts are opened against applications, and no pass books will be issued. In addition to original contract letter each monthly deposit to be made by the customers will be duly acknowledged by the Bank. Bank’s on-line network which will enable the customers to deposit their monthly commitments in any one of the on-line branches.
Every account holder will be issued with bi-annual account statements during the currency of the plan in order to enable the customers to monitor the progress of their Investor Account.

Q: Are there any other facts pertaining to the Smart Investor, you wish to share with us?
A :
As I mentioned earlier, Smart Investor is one of the strategies to mobilise, funds in line with the developments in the financial markets. We intend terminating marketing of this product by April 2009. The Smart Investor will appeal to the customers with its smart and innovative options and the fact that it enables the account holder to save expeditiously and effortlessly.

I should make special mention of the Special Draw which will be held at the end of each; month i.e. January to April 2009 among the accountholders who open Smart Investor Accounts within those months. Five winners will be selected in every month and a bonanza awaits them- as prizes. Each winner will receive a cash sum equal to the maturity value of the Smart Investor Plan for which he has subscribed.

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ComBank ATMs dispense record Rs. 10 billion in December ‘08

The Commercial Bank’s extensive island-wide ATM network, the country’s largest on-line cash dispensing system, dispensed a record Rs. 10 billion in December 2008, the bank said this week.

Popularly branded ‘CAT’ (Commercial Automated Teller), the 333 ATM network owned by the country’s benchmark private sector bank, executed withdrawals of an amasing average of Rs. 345 million a day, working out to an average of more than Rs. 1 million per machine per day during the festive month.

“This clearly shows the reliability of our ATM network and the degree of convenience it offers to customers,” Commercial Bank’s Deputy General Manager – Operations Sanath Bandaranayake said.
He said this record also demonstrated the strength and the technical capability of the Bank’s ATM network even under heavy pressure.

Last year, the bank began issuing ‘instant’ over-the-counter ATM cum debit cards to customers at the point of opening savings or current accounts. Account holders are given the option of setting their own ATM withdrawal limits up to a maximum of Rs 100,000 a day, and a point-of-sale limit of up to Rs 500,000, provided funds are available in their accounts.

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LDB provides assistance to needy school

Lankaputhra Development Bank has come forward to provide essential services to an under-privileged Roman Catholic School at Walagama in the Kegalle District.

The initiative to make available financial resources to the Roman Catholic School, was launched recently through the Kegalle branch of the Lankaputhra Development Bank. The manager of the branch, Udula Bandara presented the cheque for the amount to the Principal Hemantha Wijesiri.

A student of the Walagama Roman Catholic School won first place in the primary section in the “Lankaputhra Diriya Daruwoo” Art Competition held on August 4, 2008.

The aim of the current initiative is to encourage talented students of schools which operate under difficult conditions. The staff attached to the Kegalle branch of the bank also felicitated the teachers who encouraged the students to participate in the art competition. The principal and the teachers were presented with a “Guru Guna” felicitation plaque. A special award was presented to the Art Teacher who was the moving force behind the competitors.

Lankaputhra Development Bank is a fully state owned bank exclusively set up to boost small and medium scale entrepreneurs. It provides credit at concessionary rates of interest while, at the same time, offering attractive rates of interest for savings. Lankaputhra Development Bank offers the highest interest offered by any state bank to the Lakmuthu Children’s Account.

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Asian Alliance opens training centre at Kiribathgoda

Asian Alliance Insurance commenced the operations of their new Training & Knowledge Management Centre at No. 4, Sirimavo Bandaranayake Mawatha, Mahara, Kadawatha on January 7, 2009. This sophisticated Training and Knowledge Management Centre which is equipped with the latest technology, was formed with the objective of catering to the future development needs of AAI sales force and its entire staff. The AAI Kiribathgoda Regional Distribution Office too will transact business from this new location for the convenience of AAI’s customers.

CEO, Asian Alliance Insurance, Ramal G. Jasinghe was present as the chief guest on this memorable occasion in the history of AAI. The Executive committee members along with the management and regional distribution staff were present to witness the opening of the new centre, which included a colorful pageant by traditional dancers.
The CEO in his speech shared his views on the prevailing conditions in the economic arena and the role of AAI sales force to drive the company towards achieving its objectives in this challenging environment.

The Training and Knowledge Management is an important initiative that has strategic importance to AAI. Continuing a trend with the setting up of the IT Development Center, which began operations in early 2008, it underscores AAI’s commitment and focus on continuous development to sharpen the skills of its entire staff, to reach the highest levels of professionalism, through these well equipped centers. Effective use of Information Technology and Knowledge Management, he stressed would be the great differentiator to compete effectively in the prevailing difficult times. He further expressed that maintaining the high standards of professionalism and integrity was of utmost importance to thrive in this highly confidence based service, to the client. This will be the key factor of success.

General Manager – Sales & Marketing, Chula Hettiarachchi emphasised the thinking behind AAI forming its new Training & Knowledge Management Centre, whilst sharing an overview on the growth of the company’s sales performance. Deputy General Manager – Training & Knowledge Management, Leelaratne Piyasena reiterated the importance of knowledge management in nurturing the abilities of individuals which will drive them towards becoming successful professionals who add value to all the stakeholders.

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CDB extends operations to Kotahena

Ceylinco Development Bank (CDB) recently expanded its island wide branch network to 30, with the opening of its newest branch at Sri Ramanathan Mawatha, Kotahena. The fully fledged Kotahena Branch now joins CDB’s on-line connected branch network across the country to serve both current and potential customers of the area with greater convenience, and swifter access to the wide portfolio of services offered by CDB.

Among them are fee and fund based financial services such as leasing, business loans, project financing, trade financing, bills discounting, guarantees, management consultancy services, bancassurance, together with a range of micro financing schemes.
Speaking on the occasion Chairman of CDB R. Renganathan expressed confidence that the presence of CDB in Kotahena area would support the business community and the general public of the area with its innovative financial solutions, and will focus on meeting the multitude of financial needs that have tremendous potential.

Elaborating on the structure of regulated financial institutions by Central Bank of Sri Lanka, Renganathan also commented on the progress made by CDB during the past 13 years, and its current financial standing.

“As per the company’s un-audited accounts for the Year 2008, total assets grew by 26% to reach Rs. 6.79bn while revenue reached Rs. 1.63bn reflecting a growth of 55% compared to 2007. Net interest income grew by 28% to Rs. 408mn. CDB has recorded impressive financial results for the year 2008 with continued growth in all key financial indicators while strengthening its capital base,” he added.

CDB has evolved as a key player within the banking and financial services industry in the country, and is currently ranked within the top four largest institutions in the specialised leasing institution category under which the CDB is regulated by the Central Bank of Sri Lanka.

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Insurance made easy for Eagle customers

To most customers, insurance can be a very complicated and confusing subject. As a customer centric company, in touch with the needs and aspirations of its valued customers, Eagle has developed a special ‘Frequently Asked Questions’ booklet. This is designed to educate existing and prospective customers on the basics of Insurance. This ensures that customers who place their lives, investments and trust in the company are able to make well-informed choices with regard to their future.

To ensure extra convenience and reader-friendliness the booklet is developed in a ‘question and answer’ format. Starting with the basic question of ‘What’s Life Insurance’, the brochure deals with a number of topics including the contents in the insurance policy document, nomination of beneficiaries, payment of premiums, using the policy as security to obtain loans and how to make a claim. To illustrate the simplicity of the answers in the brochure, here is how it describes what Life Insurance is. “Life Insurance promises the payment of an agreed sum of money upon the death or disability of the insured within a specified period of time.”

An Eagle Insurance spokesman explained that though the insurance habit has spread in the past few years, especially after the private sector companies started operations, there is a need to explain in simple terms the fundamentals of insurance, due to its complex nature.

He further added, “We are consistently striving to make the lives of our valued customers easier, and we identified the need to help simplify insurance for our customers, in the easiest manner possible. While our agents and customer services executives and call centre representatives are fully geared to answer all questions that our customers may have, this is yet another endeavour to enhance the convenience of obtaining insurance products.

In February 2006, the Aviva Group acquired a majority stake in Eagle. Aviva is one of the world’s oldest insurance groups, with a history dating back over 300 years to 1696. Today it is the world’s fifth-largest insurance group and the biggest in the UK. The group has 57,000 employees serving 45 million customers worldwide with more than GBP 359 billion of assets under its management.

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DFCC Vardhana Bank signs MoU with LECO for more customer services

DFCC Vardhana Bank, the everyday banking unit of DFCC Bank, the leader of development banking, signed an MoU recently with the Lanka Electricity Company (Private) Limited. This new partnership allows LECO customers to be provided with the added convenience of making bill payments from any of the bank’s branches. This agreement is part of a move by Vardhana Bank to offer a greater range of services to its customers.

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