Robust growth in loans buttresses LOLC June performance

• Absence of larger gains on bargain purchases caused only modest performance in profits 

LOLC Holdings PLC reported a modest performance for the three months ended in June 2025, largely supported by its financial services behemoth, which was possible on the back of higher lending, as the rates remained lower. 

While its other diversified business interests also showed some positive momentum during the quarter, its operating level performance lagged behind.  

The company generated what it called the gross income of Rs.93.35 billion for the April-June period, its first fiscal quarter, up 19.3 percent from the same period last year.

The gross income consists of interest income from its financial services portfolio, both at home and abroad, revenue from its manufacturing, leisure and plantation business and the incomes from insurance and factoring business and other incomes from foreign exchange gains or losses and the capital gains or losses from marked-to-market valuation from its quoted shares held for trading.

Net interest income from its financial services business led by its subsidiary LOLC Finance PLC came in at Rs.27.50 billion for the quarter, up 15.3 percent from the same period last year.

This came on the back of some strong loan growth, as the group grew its loans and leases book by a massive Rs.105.08 billion, which translated to a 13.9 percent increase for the year through June 2025. For the three months, the loans grew by a robust Rs.41.85 billion.

Customer deposits at group level grew by Rs.49.78 billion while the interest-bearing borrowings grew by Rs.36.20 billion in the year through June 2025.

Meanwhile, the group’s manufacturing segment reported a revenue of Rs.14.62 billion for the quarter, up from Rs.10.21 billion a year ago but at operating level, the profits came down to Rs.744.06 million, from Rs.752.33 million a year ago.

The leisure segment of the group, which runs a suite of resorts, reported revenues of Rs.3.46 billion, up from Rs.2.51 billion a year ago, as this business appears to have received a lift from the revival seen in the tourism sector. However, at operating level, the leisure segment reported a loss of Rs.400.61 million, narrowing from a year earlier period loss of Rs.584.84 million.

The group’s outsize plantation segment, which during the last two years expanded rapidly from the acquisition of several tea estates in Africa and in Sri Lanka, reported revenues of Rs.18.84 billion, up sharply from Rs.13.23 billion in the same period a year ago.

The operating profit however fell to Rs.1.24 billion, from Rs.2.34 billion a year ago.

The group booked a gain on bargain purchase of Rs.223.86 million for the quarter from its acquisition of a 75.27 percent stake in Tea Smallholder Factories PLC for Rs.793.27 million. Besides, the group also acquired the 100 percent stake in FLMC Plantations (Pvt.) Limited, the holding company and management agents of Pussellawa Plantations Limited and Melfort Green Teas (Pvt.) Ltd for Rs.4.8 billion on May 5.

In the past, LOLC made huge profits, largely coming from its massive gains from the tea estates and other assets it bought less than their net asset value.

Incomes recognised from its other businesses such as insurance and factoring came in at Rs.9.30 billion, up 29.3 percent from a year ago.

Meanwhile, the bottom line was weighed down by the slump in the share of profits from the group’s associate and joint venture companies to Rs.691.05 million, from a year earlier period profit of Rs.2.39 billion. This appeared to be due to the divestment of its 9.9 percent stake in May of the voting shares of Hatton National Bank PLC.

Other incomes, which capture both the capital and marked-to-market gains from the group’s quoted shares, recognised as held-for-trading, reported at Rs.7.87 billion, down 11.3 percent from a year ago.  

Against this backdrop, LOLC reported earnings of Rs.9.74 a share or Rs.4.63 billion for the June quarter, compared to Rs.9.52 a share or Rs.4.52 billion in the year earlier period.