Project detail - LB FINANCE PLC

LB FINANCE PLC

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Who is our client

LB Finance is a regulated deposit-taking Non-Banking Financial Institution in Sri Lanka, which was incorporated in 1971. The principal activities of LB Finance include providing finance lease and vehicle loan facilities (together ca. 60% of the loan portfolio), next to offering gold loans, mortgage loans and other credit facilities to mainly MSMEs and some corporates and to individuals. LB Finance is a top-3 player in the Sri Lankan NBFI space and serves over 600,000 customers throughout Sri Lanka through a network of 169 branches/centres.

Funding objective

The USD 15 mln Loan Facility granted by FMO to LB Finance will be used for the growth of LB Finance’s micro and SME loan/leasing portfolio and will be dedicated to on-lending to agri (75%) and youth clients (25%).

Why we fund this project

With this Loan Facility, FMO supports a well-managed NBFI in Sri Lanka. LB Finance’s loan portfolio consists for a significant amount (ca. 90%) of loans to micro and SME clients, who, due to their perceived risk-profile, often encounter difficulties in obtaining loans from the larger banks. The loan is specifically dedicated to agri and youth clients and encourages the formalization and/or growth of SMEs and micro-enterprises in Sri Lanka. The loan therefore contributes to FMO’s Reducing Inequalities target.

Environmental and social rationale

E&S category C. Due to LB Finance’s relatively high exposure to Gold Lending, the Loan Facility will be accompanied by a Capacity Development program which will provide better insight into the end uses of the gold loans that LB Finance provides to their clients as well as adherence to best practices of Client Protection Principles.

Website client
https://www.lbfinance.com
Region
Asia
Country
Sri Lanka
Sector
Financial Institutions
Signing date
4/21/2021
Total FMO financing
USD 15.00 MLN
Fund
FMO
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
C