In 2019/20 following Central Bank directives ,Citizens Development Business Finance PLC will undertake the merger of their 90.38% – owned specialized leasing subsidiary, Unisons Capital Leasing Ltd. (UCL), and  their fully – owned subsidiary Fortune Properties Limited with CDB.

“This move is expected to rationalize some of our operating costs,” Chairman of Citizens Development Business Finance PLC, D H J Gunawardena told shareholders in the annual report 2018/19.

The expected growth impetus in Sri Lanka’s economic activities was obstructed by a series of domestic and global occurrences.

The country’s external sector suffered a setback on account of the expansion of the trade deficit, rising foreign debt repayments, net outflows in the Government securities market and the Colombo Stock Exchange and the sharp fall in the value of the rupee.

Its impact on the economy was exacerbated by political uncertainties and the downgrade of the country’s sovereign rating experienced in the last quarter of 2018.

Policy measures taken by Government to curtail motor vehicle imports affected core lending activities of NBFIs.

Introduction of higher LC margins on motor car imports, cash margin requirement on selected consumer goods imports, tightening of the Loan to Value ratio on motor vehicle related financing, suspending the issuance of LCs on concessionary permits for vehicle imports, together with the steep depreciation of the SL Rupee against the US Dollar had a profound impact on the leasing business, particularly vehicle leasing which is one of the core business activities of the NBFI sector.

The profitability of NBFIs was also adversely affected by increased funding costs and higher loan loss provisions made against NPLs as required under SLFRS 9.

“Viewed in the backdrop of a challenging operating environment, our strong financial performance is all the more significant. We took giant strides during the year to become one of the leading financial institutions in Sri Lanka by increasing our asset base by 18% to reach Rs. 89 Billion. Our profit after tax of Rs. 1.7 Billion reflected an increase of 22% over the previous year whilst Shareholders’ funds increased by 21% to reach Rs. 8.6 Billion.”Gunawardena said.

He further stated that in order to keep abreast with best practices in accounting standards and to comply with prudential policy measures laid down by the CBSL, CDB adopted SLFRS 9 in the previous financial year prior to it becoming mandatory, the only NBFI to do so.

“The terrorist attacks experienced on the 21 April 2019 and its negative impact on key sectors of the economy is likely to slowdown progress being achieved to bring about the reforms needed to ensure macroeconomic stability and create a favourable economic climate for local and foreign investors,” he added.

In view of elections due in the latter part of the year,Gunawardena noted that it is unlikely that the political environment will be conducive to economic growth.

“Nevertheless, Sri Lanka could be back on a growth trajectory before long provided the political leadership is united in its efforts to restore public confidence and navigate the country in the right direction to bring about sustainable peace so that the different segments of society can coexist and work towards the common good of the nation” he said.

Despite the challenges CDB is likely to face in achieving its key targets for 2019/20.

“We are confident that the strong foundations that are in place, our clear strategic direction, and the value of resilience that is embedded in our organizational culture augurs well for your Company,”Gunawardena added.