Alliance Finance Company PLC ( AFC), concluded the first quarter of the Financial year 22/23 with a resilient performance amidst inimical domestic and external environs which impacted the country, a spokesman said. The first quarter of the financial year severely impacted the business climate due to the increase in market interest rates, lower credit demand, increased fuel prices and shortages in supplies.
The country also defaulted its foreign debt payments resulting in the country being downgraded by external rating agencies. Sharp depreciation of the Sri Lankan rupee and a significant increase in headline inflation also negatively impacted the economic activity of the country at large, he added.
Despite the external challenges, the Company reported a solid 54 % increase in total Interest Income while doubling its profit after tax for the quarter in comparison to the same period last year. It is noteworthy that the said performance was reported by the Company during a period of adverse economic conditions after making a significant amount of provisions prudently by way of Management overlays in addition to the modeled Impairment provisions. Further, the Company also accounted for significant increases in cost of funds and operating expenses due to the upsurge in fuel prices and the resulting adverse inflationary impact. AFC was also able to maintain its loan book although the industry recorded a contraction.
Performing better than the industry, the Company was also able to maintain its Gross NPL ratio at 4.87% during the most challenging economic conditions experienced post-Independence thus reflecting the success of its triple bottom line business philosophy and the reduced risk of its portfolio as a result of focusing on the financing of the smaller rural economies in the country, the spokesman further added.