Q: How has the LOLC Group surmounted challenges brought on by the pandemic?
A: During financial year 2020/21, our strategy was altered to reflect the impact of COVID-19 as we increased our secured lending base, reduced unsecured lending, and supported customers by rescheduling payments and with moratoriums.

It is noteworthy that the group sustained its credit rating of ‘[SL] A’ amid pandemic related challenges, underscoring the sound risk management principles it has adopted.

The conglomerate recorded a high customer retention rate as the seamless delivery of products and services was ensured throughout the year. This was supported by digital platforms to enable customers to make financial payments from the safety of their homes.

Staff retrenchments and pay cuts were not instituted as we believe employees are an integral part of our success.

The work from home (WFH) initiative was managed smoothly as LOLC’s business continuity plans were geared for such eventualities, and staff members were supported, and encouraged to follow training programmes and online certification courses. And the group’s e-learning platform was used to assist training and development initiatives.

Q: Could you outline your views on the state of business in the country given the crises Sri Lanka faces?
A: The state of business in Sri Lanka is at its most challenging at the moment. For many years, security was the only threat but today, the financial risks are very high given the impact of COVID-19 on the economy.

In terms of sovereign ratings, Sri Lanka has some inherent strengths that rating agencies are unable to consider as they need to work based on statistics alone. What’s most important is that we have maintained an unblemished track record of debt repayments and honouring debt commitments so far, which should be one of the most important considerations for investors and multilateral financial institutions.

Furthermore, following the high level of inoculations in every region, we are seeing commercial and other activities returning to normalcy, which should pave the way for a quicker economic recovery.

Q: What are the group’s medium-term priorities in this landscape?
A: LOLC’s main priority is to expand its global footprint; we are looking at multiple countries across Asia, Africa and South America. We currently have a presence in five South and Southeast Asian nations in addition to Sri Lanka, four in Africa and one in Central Asia in the financial services industry.

The group’s focus is to grow internationally, increasing the number of countries in which it operates while consolidating businesses in those it’s already in, thereby diversifying the sovereign risk of any individual country on operations while availing itself of the growth opportunities available in each nation.

As the global vaccinated population continues to increase, we are seeing downward trends in non-performing loans, and an upward trend in lending and deposits across the geographies where we have a presence.

In addition to financial services, we’ve observed positive results across all the sectors in which we’re engaged – in many of which we command leadership positions.

Q: How are technological advancements impacting the financial services industry?
A: We’re heading towards a digital era and the adoption of the appropriate technology will play a critical role in the success of financial institutions in the future – not only in Sri Lanka but globally. We have enabled digital platforms across the group – this has been a part of our success in overcoming pandemic related impacts as well.

Q: What is your take of LOLC’s performance under existing macroeconomic conditions?
A: We have taken the global slowdown as an opportunity to grow in Sri Lanka to diversify business lines and consolidate existing businesses, as well as expand our global footprint in financial services and other industries.

Looking at LOLC 15 years ago, it was just a leasing company. But today, it is among the largest conglomerates in the country.

For our group, diversification is not merely about expansion within the country but also about making our mark across borders. As at the end of 2021, we are present in 15-20 countries, mainly in the realm of financial services, strengthening our position as one of the world’s largest players in microfinance.

Kapila Jayawardena
Group Managing Director
Chief Executive Officer
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