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Sri Lanka’s LOLC net down 74-pct in March 2020 quarter

ECONOMYNEXT – Profits at Sri Lanka’s LOLC Holdings fell 74 percent to 1.49 billion rupees in the March 2020 quarter from a year earlier with a strong showing by its Cambodia operations, despite weak economic conditions at home, interim accounts show.

The group reported 1.5 billion rupees in profits, down from 1.9 billion a year earlier on discontinued operations which included Prasac, a Cambodia micro-finance company where a sale has since taken place to South Koreas KB financial group.

The group lost 94 million rupees on continuing operations.

LOLC Holdings reported earnings of 3.07 rupees of rupees with discontinued operations and a 20 cent loss on continuing operations.

The stock closed at 144.10 rupees on Wednesday.

The firm sold PRASAC to South Korea’s KB Securities for 607 million dollars. Discontinued operations also included a mango farm and Browns Hospital which has been sold.

Cambodia is dollarized and its central bank no longer has power to depreciate the currency and destroy capital and trigger monetary instability, after the currency at one time collapsed to 4,000.

Out of a total of 4.6 billion rupees in profits on discontinued operations, 1.53 billion came to the company.

While the sale would reduced profits from dollarized Cambodia, the share of funds coming LOLC is expected to generate profits for the group in the long term.

LOLC also has another micro-finance company in Cambodia.

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“Despite the sale of PRASAC, LOLC still has a foothold in the fastest growing Southeast Asian country via LOLC Cambodia, the fourth largest Microfinance Institution (MFI) in terms of portfolio size,” LOLC said in a statement.

The group owned 97 percent of LOLC Cambodia which had assets of over a billion US dollars, a loan portfolio or 857 million dollars, deposits of 501 million dollars and profits of 34.6 million dollars, the firm said.

LOLC has bought into a micro-finance company in Nigeria in 2019. However Nigeria also has monetary instability and its central bank takes the country to the International Monetary Fund after printing money. From 2014 todate the Niara has fallen from 164 to 375 to the US dollar.

In the current year LOLC said it will focus on consolidating its existing businesses while looking at ” promising investments in Africa and Asiafor long-term value creation.”

Within Sri Lanka, LOLC said its operations were hit by East Sunday attacks and weak growth. The firm had seen higher impairment charges and dips in net interest income. (Colombo/Aug12/2020)