Jul 05, 2017

Asia Asset Finance PLC kicks off 2017 with a steep growth trajectory

Asia Asset Finance PLC (AAF), a licensed deposit taking institution registered with the Central Bank is now on a steep growth trajectory after the company’s tie up with Muthoot Finance a 128 year old Indian family owned firm, an official at the helm of the company said.

A large number of Small and Medium scale Enterprises (SMEs ) and micro business enterprises across the country helped by AAF funding as more businesses take advantage of the options that asset finance can make available to support growth and stability.

The strategy for the next two quarters of the financial year is to continue to hold this momentum which would see AAF being pushed to being in the top 10 finance companies in the industry, he said.

This asset finance lender has recorded strong growth country wide with its regional branches numbering 16 as it increased the asset base to Rs. 10 billion during 2016/17 from Rs. 8.1 billion in the previous year posting Rs.2 billion interest income and Rs. 275 million profits after tax, Rajiv Gunawardena – Chief Executive Officer (CEO) of AAF said.

The firm grew revenues 68.14 percent from Rs.1.27billion to Rs.2.13billin while net income improved 58.69 percent from Rs.175.22milion to Rs. 278.05million.

It has increased its cash reserves by 17.17percent, or Rs.146.45million. Cash Flow from Financing totalled 602.69million or 28.29 percent of revenues. In addition the company used Rs.459.86million for operations while cash from investing totalled Rs. 3.62million.

Debt to Total Capital ratio was 82.51 percent, a lower figure than the previous year's 110.15 percent.

Year on year, growth in earnings per share excluding extraordinary items increased 58.05 percent. Additionally, five year annualized earnings per share growth ranks above the industry average relative to its peers, company’s financial statement showed.

The introduction of gold loans and the expansion of its micro finance portfolio as well as asset financing for SME’s have been the key contributors to this year’s growth, Mr. Gunawardena said.

The company has introduced a unique product to cater to the needs of the SME sector which has been the key contributor to the success of its performance during the 2016/17 financial year.

This product is combined with value additions to SMEs with technological support, knowledge sharing forums and management assistance.

The company has seen a 70 percent growth in its gold loan business in the country––enjoying the patronage of a good chunk of people in the North and East, he revealed.

Gold loan business has been introduced in all 16 branches of AAF and is gradually picking up, he disclosed.

At present gold prices have risen to a considerable extent, making the yellow metal the best performing asset class so far in 2017; he said adding that the company has followed international gold prices in calculating the value when granting gold backed loans.

The AAF offers up to (maximum) 75 per cent of the value of gold pledged as a loan for customers who in need of funds at short notice, he said pointing out that their default rate was very minimal (almost zero).