Lasco Financial Services aiming to build loan portfolio amid COVID-19 falloutWednesday, June 23, 2021
BY DAVID ROSE
Although Lasco Financial Services Limited (LFSL) saw a complete reversal of its $56.92 million consolidated net loss into a $156.75 million consolidated net profit for its 2021 financial year (FY), the company is looking to clawback market share on its microfinance business as the novel coronavirus pandemic pushed its loan portfolio lower.
LFSL is a provider of money services with its remittance segment being the key driver of income for the business. Despite LFSL company's revenue and profits climbing to record levels of $1.72 billion and $241.28 million, respectively, its subsidiary Lasco Microfinance Limited (LML) continued to drag on the consolidated group performance. Even with a reduction in business as evidenced by the loan portfolio shrinking from $1.87 billion to $1.26 billion, LML's still had a net loss of $84.53 million which was lower than the $284.81 million set in the 2020 FY.
“We plan to regrow the loan portfolio in line with the opening up of the economy to support our customers and the money service business has been growing through increased partnerships. Customers whose business were impacted were also offered restructuring to match their new cashflows. The demographic remains the same. We serve the micro businesses. What has changed is we have focused on serving the pandemic resistant businesses such as retail distributors,” said Managing Director Jacinth Hall Tracey.
Unlike the 2021 FY which was marred by the pandemic, LFSL sees new opportunities in the microfinance and payments space. One of these was the implementation of the Microfinance Act which is expected to nudge some existing players to sell their loan portfolios to larger firms which will be able to comply with the new law. When asked about the opportunity for LFSL to acquire some of the loan portfolios. LFSL will continue to watch the space for opportunities,” the managing director said.
Hall Tracey explained that the company's corner shop loan has been delayed but will be launched by the end of this month. This is one of the plans to rebuild LML's loan books. LML's loan books drastically improved in the 2021 FY as 95 per cent of its loans were either current or in the 90-day timeline compared to the prior FY where a larger nominal amount was outstanding past the 90-day mark.
The other prospect which exists for the LFSL is its Lasco Biz platform which is still in the pilot of the Bank of Jamaica's sandbox development platform. Although the platform is still limited, Hall Tracey noted that the monthly signups has been steadily increasing as more customers seek digital options in these perilous times. Lasco Biz is an e-commerce platform which allows business owners to manage inventory, maintain records, automate invoices and prepare simple financial statements. LFSL will also be pushing for more of its remittance transactions to be processed through its Lasco Pay prepaid Mastercard which forms part of its aim to scale and restructure the business.
LFSL's total group assets were up by 11 per cent to $4.42 billion as cash jumped by 85 per cent to $695.41 million plus the growth in receivables and short-term deposits. Total liabilities increased by nine per cent to $2.46 billion which was largely attributed to the spike in payables from $182.51 million to $714.68 million. LFSL's loans declined by 18 per cent to $1.46 billion as the group paid off a $150.89 million corporate note along with a Development Bank of Jamaica loan. Equity was up by 14 per cent to $1.95 billion.
When asked about the future prospects which lie ahead for LFSL and the overall Lasco group of companies, Executive Chairman Lascelles Chin explained that there will be the roll-out of new products while the companies focuses on being risk averse to the implications from the uncertainty associated with the pandemic.
“With Lasco Financial, we're trying to recoup where we are now consolidating and trying to implement the new products we've been working on for quite some time. We have new products coming on and we are watching the pandemic's progression before introducing those products. We've gotten permission on some products to go ahead.
“For the whole Lasco group, we're quite confident and have excellent management teams who are being trained to improve. We're going to work harder, improve the service and sales on the products we have in our portfolio. We're also looking at new acquisitions.” stated Chin.
“We have to be careful. The Government has been doing a good job under the circumstances. Many Jamaicans will feel disappointed and constrained with the jobs lost plus the difficulties which arose over the last year. However, we still have to be grateful that we're better off than many countries. Many countries are worse off and we have to spend very carefully as new varieties [of COVID-19] are springing up and you never know what the future holds.”
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