LOLC GROUP
Q: How has the LOLC Group surmounted the challenges posed by the pandemic so far – including the impact on human resources?
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 loans and offering moratoriums.
It is noteworthy that the LOLC Group sustained its credit rating of ‘SL A’ amid the pandemic related challenges, underscoring the sound risk management principles that have been adopted by the group.
The group recorded a high customer retention rate as seamless delivery of products and services to clients was ensured throughout the year. This was supported by digital platforms, enabling them to make payments from the safety of their homes.
No staff retrenchments or pay cuts took place as we believe that the workforce is an integral part of our success. The work from home initiative was managed smoothly as business continuity plans were geared towards such eventualities. Employees were supported and encouraged to follow training programmes and online certification courses.
The group’s e-Learning platform was used to further assist the group’s training and development initiatives.
Q: What is your assessment of the state of business in the country given the multiple crises it faces?
A: The state of business in Sri Lanka is one of the toughest ever right now. For many years, security was the only threat; but today, it is about financial risks, given the impact of COVID-19 on the economy.
In terms of sovereign ratings, Sri Lanka has certain inherent strengths that rating agencies are unable to consider because they have to work on the basis of statistics alone.
But what’s most important is that Sri Lanka has maintained an unblemished track record of debt repayments and honouring its commitments to lenders. This should be one of the most important considerations for investors and multilateral finance institutions.
However, following the high level of vaccinations, we are seeing economic activity returning to some degree of normalcy – and this could pave the way for a quicker economic recovery.
Q: What are the group’s medium-term priorities given the prevailing business environment?
A: Our main priority is to expand the group’s global footprint – we are looking at multiple countries across Asia, Africa and South America. Currently, we maintain a presence in five South and Southeast Asian countries in addition to Sri Lanka, four nations in Africa and one country in Central Asia in the financial services industry.
The LOLC Group’s focus is to grow internationally by increasing the number of countries it operates in while consolidating businesses in locations where it already has a presence. This will enable us to diversify and capitalise on opportunities abroad while diluting the impact of any sovereign risk of a particular country.
Q: And how about lending and deposit trends along with the status of nonperforming loans?
A: As the vaccinated population continues to increase, we see a downward trend in nonperforming loans, and upward momentum in lending and deposits, across the geographies where the group maintains a presence.
In addition to the financial services industry, we see healthy results across all sectors that LOLC operates in, where we command leadership positions in many industries.
Q: In your opinion, to what extent are innovation and technological changes impacting this industry given the changes that have taken place during the pandemic?
A: We are heading towards a digital era and adoption of appropriate technology will play a key role in the future success of financial institutions – not only in Sri Lanka but globally too.
Across the group, we have enabled digital platforms and this has been a part of our success in overcoming pandemic related impacts as well.
Q: How is the group faring under existing macroeconomic conditions?
A: We have taken the current global slowdown as an opportunity to grow in Sri Lanka – i.e. through diversification of business lines and consolidation of existing businesses – as well as extend our global footprint in financial services and other industries.
In financial year 2020/21, Browns Investments acquired a 90 percent stake in Udapusselawa and Hapugastenne Plantations, which were previously owned and managed by James Finlay Sri Lanka. This acquisition will unlock the long-term value of these estates while augmenting the group’s plantations portfolio, which already consists of the 11,595 acre Maturata Plantations.
Q: And finally, what plans are in the pipeline for the LOLC Group going forward?
A: LOLC was only a leasing company 15 years ago; today, it is the largest conglomerate in the country. For the group, diversification means onshore as well as offshore expansion.
By the end of 2022, we intend to be present in about 20 countries in the realm of financial services, further strengthening our position as the world’s largest player in microfinance.
