Sarvodaya Development Finance records a historic year
Sarvodaya Development Finance PLC (SDF) made history last year by becoming Sri Lanka’s first impact investing company to list on the Colombo Stock Exchange (CSE) and reported its best earnings yet , for the 2021-22 fiscal year.
SDF debuted on the CSE board in November, raising Rs 1 billion in equity from its initial public offering (IPO). The IPO was oversubscribed at midday, indicating the high level of investor interest and confidence in the financial services arm of the Sarvodaya movement, despite the prevailing global economic uncertainty.
“While SDF’s loans surged after the IPO, more than 90% of the company’s total loans are asset-backed loans,” Chairman Channa de Silva said.
“The SDF concluded the 2021-22 financial year by demonstrating its potential to support the country’s economic recovery in this difficult environment. As the financial services arm of the Sarvodaya movement, the SDF is committed to doing everything in its power to create wealth for the nation, and looks forward to supporting the country’s entrepreneurs in the new financial year. “, did he declare.
The SDF has a proven mechanism for channeling funds to the development of micro, small and medium enterprises, the majority of which are located outside the Western Province. Over 80% of its branches are outside the Western Province and SDF also works with 5,400 Sarvodaya Shramadana companies to channel funds to the end user, provide savings options and other support, including business training and market development activities, for rural entrepreneurs.
The SDF’s lending activities are limited by the principles of Sarvodaya. SDF does not lend for activities deemed antisocial and/or inhumane. These excluded sectors include butcher shops, businesses related to alcohol, drugs and gambling.
The 1 billion rupees of new equity increased SDF’s capital base to 3.1 billion rupees, which is comfortably above the legal minimum of 2.5 billion rupees. The Tier 1 capital ratio has improved to 27.37% from the minimum legal requirement of 7%, and the Total Risk-Weighted Capital ratio is 28.62% from the legal minimum of 11%.
The new capital also enabled SDF to rapidly expand its business activities during the last quarter of the year. Business growth was supported by Central Bank approval to upgrade 21 SDF customer service centers to full-service branches, expanding the branch network to 51.
Fueled by the growth in the loan portfolio, SDF recorded a post-tax profit of Rs 215.5 million, a growth of 17.5% compared to the post-tax profit of Rs 183.3 million recorded the previous year.
Total lending increased by 25.03% while the agricultural sector remained the largest beneficiary of SDF credit, absorbing 48% of total disbursements during the year, or Rs 3.91 billion. This is an increase of 87% over the previous year.