Siyapatha Finance performs successfully despite challenges in the financial environment
The 2019 financial year was characterized by a subdued overall economic growth as a result of several challenges faced by the country as well as worldwide. The Non-Banking Financial Institutions (NBFI) sector recorded a negative credit growth that mirrored the macro economic conditions that prevailed at the time.
Regardless of the fragile performance of the sector, Siyapatha Finance recorded a robust asset growth of 13%, coming close to the projection for the year despite the unfavourable circumstances of the time. The company’s profit before taxes grew by 7%, whereas the topline saw an increase of 13%, ending the year with equanimity. Profit after tax for the second half of the year reflected a growth of 164% over the first six months of the year.
The successful performance was achieved as a result of shifting the focus on to two key market segments in which Siyapatha Finance holds high levels of competency. Consequently, Micro Leasing was added to the core business areas of Leasing and Gold Loans. Micro Leasing caters to a segment that has high potential and represents a majority of enterprises in the country, including small and medium businesses. Siyapatha Finance has recognized the importance of catering to this segment by funding and uplifting them, while ensuring that depositors are secured.
The assurance of trust that customers of Siyapatha Finance have experienced since inception was reflected by the successful mobilization of Rs. 1.5 billion through a listed subordinated debenture issue. The rated, unsecured subordinated, five-year debenture issue had an initial tranche of Rs. 1 billion with an option to raise by Rs. 500 million, in the event of an oversubscription of the initial tranche.
Maintaining high standards of governance and compliance with all statutory governance standards are paramount to financial institutes. In 2019 Siyapatha Finance strengthened the Risk and Compliance functions by forming two separate divisions for each function. Furthermore, the company has not recorded any departures from provisions of the Finance Companies Direction No. 3 of 2008 and subsequent amendments on Corporate Governance issued by the Central Bank of Sri Lanka or the Colombo Stock Exchange. Siyapatha Finance voluntarily adopted The Code of Best Practices on Corporate Governance 2013 issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka.
Siyapatha Finance has also improved its risk management and credit evaluation processes while maintaining the targeted credit growth and primary objectives of business development. As such, many methodologies were introduced to assist risk management, evaluate risk profile, estimate potential losses, propose remedial actions, periodically stress test, and ensure sufficiency of buffers.
“The Siyapatha Finance Team, including the Board of Directors and the Corporate Management spearheaded by the Managing Director, took a long and hard look at the business and came up with a clear strategy that would secure the investments of our customers while ensuring that all stakeholders reap benefits for their commitments. Together we clearly identified the strengths of our operations and built sustainable measures into the system. I am personally proud of the overall performance of the whole team”, stated Sumith Cumaranatunga, Chairman of Siyapatha Finance.
Ensuring sustainability, Siyapatha Finance has also focused on its core strength of serving the targeted segments with a range of financial solutions. This has enabled the company to continuously maintain the value of its services. Siyapatha Finance executes a strategy that enables financial inclusivity of targeted customer groups, including small and medium clientele, through finance Leasing, Gold financing and deposit mobilization. This is achieved by geographical expansion and market penetration, along with a diverse offering of Leasing and Gold Loan products. The use of IT infrastructure and presence on digital platforms will be other avenues that are to be explored in order to strengthen market share. Improved effectiveness and faster response time will be prioritized to ensure a healthy course of progress for the customers and all other stakeholders.
The challenge for 2020 will be to manage in an economy striving to recover during the rest of the year. Despite the hurdles and unfavourable circumstances in the industry as well as the economy in general, Siyapatha Finance has distinguished itself by posting an impressive performance in the 2019 financial year and looks forward to sustain the spirit of accomplishment in the future.