Mercantile Investments and Finance PLC’s (MI) recently published annual report and financial results showed the company’s continued business solidity in terms of recording commendable core business growth, whilst posting robust profitability levels for the concluded financial year 2015/16.
MI’s pre-tax profit and post-tax profits stood robustly at Rs.803 million and Rs.505 million, respectively, though dropping by 12 percent and 20 percent, respectively from last financial year. The rising interest rates and the resultant repricing effect continued to impact the LFC sector including MI, in terms of increasing funding cost and exerting pressure on core margins enjoyed. MI to a great degree was able to maintain acceptable core margins by optimizing its attractive diverse lending product mix, moreover focusing its strategy on building its core business of lending.
Despite the vehicle sales market witnessing somewhat challenging conditions mainly due to the high import duty structure, Ml’s lease finance business picked up creditably by 83 percent year-on year.
Managing Director Gerard Ondaatjie said in the midst of a 20 percent total asset expansion, importantly the company managed to safeguard its asset quality, reflective from the decline in Ml’s non-performing lending ratio, which stood at 3.39 percent compared to 4.19 percent recorded previous financial year end. Deposit mobilisation too remained steady with the deposit base growing by 15 percent year-on-year despite the stiff competition among the financial services sector in mobilising savings of people.
Having been in finance business for over 50 years, Ml’s financial strength and stability remained solid, reflective from its strong capital base, which exceeded Rs.7.5 billion. Accordingly, Ml’s core capital adequacy ratio and total risk weighted capital adequacy ratio stood well above the prudential requirements of 5 percent and 10 percent at 19.35 percent and 15.75 percent, respectively.
Mercantile Investments and Finance PLC is a licensed finance company under the Finance Business Act No. 42 of2011, listed on the Diri Savi Board of the Colombo Stock Exchange.