Monday, November 29, 2010

Singer Finance to announce IPO this week

* Deposits up 38% in 2009/10, lending portfolio Rs. 3 billion
* NPL 2.3%, below industry average of 11.7%

In keeping with regulatory requirements, Singer Finance (Lanka) Ltd. is planning an initial public offering details of which would be announced by next Thursday.

Having achieved a remarkable Gross Non-Performing Loan (NPL) ratio of 2.3 percent, compared to the industry average of 11.7 percent as at June 30, 2010, and increasing its lending portfolio to Rs 3 billion as at 31st March 2010 since its incorporation in 2004, the Company has set its sights on further expansion through a corporate plan that emphasizes superior service, products, and financial discipline, the company said in a statement.

Compared with an industry average NPL ratio of 11.7 percent as at June 30, 2010, Singer Finance’s ratio of 2.3 percent as at June 30, 2010 is outstanding, it said. "The Company’s Gross NPL ratio is significantly low for consumer durables financing (approximately 1.1 percent) while leasing and hire purchase financing for vehicles also has a low NPL percentage (approximately 6.75 percent). Given a financial environment where the NPL ratios in the industry had been weakening due to the adverse macroeconomic environment, the fact that Singer Finance’s ratio has been improving since the 2007 financial year is especially impressive. The Company’s low NPL ratio, which is a reflection of its high asset quality, has been achieved through prudent marketing, credit and finance management practices and the guidance of its parent company, Singer (Sri Lanka) PLC."

"For example, even though regulatory policy stipulates 50 percent provisioning for loan defaults over six months and 100 percent provisioning at twelve months, Singer Finance is far more stringent, with 50 percent provisioning for defaults over four months and 100 percent provisioning at the end of six months in the case of leasing and hire purchase facilities.

"For consumer loans, the Company makes a 50 percent provision for defaults over two months while 100 percent provisioning takes place at the end of four months. By adhering to these higher self-imposed standards, Singer Finance has been able to maintain a healthy loan loss coverage ratio and expedite the recovery process."

As a Registered Finance Company fully owned by Singer (Sri Lanka) PLC, Singer Finance provides an extensive range of financial services to a wide variety of Sri Lankans. Standard services such as vehicle hire purchase and leasing and the acceptance of fixed deposits are bolstered by a number of innovative products, including agro-equipment financing as well as credit facilities for products manufactured by Singer.

Singer Finance also offers real-time repayment channels, which allow customers to make their leasing, hire purchase and loan installment payments at any Singer Finance branch or any one of over 370 Singer Plus, Sisil World, Singer Homes, and Singer Mega showrooms island-wide.

Singer Finance has widened its reach with 6 branches, in addition to its Head Office business unit located at 331, Dr. Colvin R. De Silva Mawatha, Colombo 02 (Union Place), as well as 6 customer service centers. The Company’s branch and customer service network caters to the Western, North Central, Wayamba, Central, Southern and Uva provinces, with main branches in Kurunegala, Anuradhapura, Wennappuwa, Wattala, Kandy and Matara, and customer service centers in Thambuttegama, Medawachchiya, Nikaweratiya, Dambulla, Mahiyangana and Galle.

The Company’s interest income and net interest income have increased, with a compound annual growth rate of 75.6 percent and 62.8 percent respectively. "These aggressive gains have been driven by a rapid expansion of the Company’s share of the leasing and hire purchase market, as well as the successful launch of consumer financing for Singer (Sri Lanka) customers in 2009. Singer Finance has also recorded a significant improvement of 19 percent in its net interest margin," the company said.

"The significance of Singer Finance’s accomplishments is magnified, when the difficult environment faced by the RFC sector is taken into account. For example, the Company has been able to achieve a steady growth in its deposit base, despite the outflow of funds from the RFC sector caused by the troubles experienced by certain finance companies. Indeed, Singer Finance recorded a 38 percent year-on-year growth in its public deposits for the 2009/10 financial year," it said.

Singer Finance has a capital adequacy ratio of 16.10 percent as at August 31, 2010.

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