Karachi: SME Leasing Limited, a subsidiary of SME Bank, has reported a significant financial loss for the period ending March 31, 2024, due to the ongoing winding down process initiated by the Ministry of Finance. The company's board of directors, operating under incomplete conditions since August 2023 due to vacant nominee director positions, presented the un-audited condensed interim financial statements on a non-going concern basis.

For the period ending March 31, 2024, SME Leasing Limited reported a loss of Rs 124.423 million, a substantial increase from the Rs 12.671 million loss reported in the same period the previous year. This loss has caused accumulated losses to surge to Rs 552.774 million as of March 31, 2024, up from Rs 428.352 million on December 31, 2023. The company's net equity stands at a negative Rs 184.308 million, significantly below the minimum prescribed equity requirement of Rs 50.00 million for non-deposit taking leasing companies.

The financial instability is further highlighted by negative cash and cash equivalents of Rs 147.664 million, and current liabilities exceeding current assets by Rs 178.790 million as of March 31, 2024. Total recoveries from the portfolio amounted to Rs 6.413 million during this period, although no new business was written. The company maintained its focus on recovering non-performing loans (NPL) through legal processes and negotiations, with provisions for NPLs recorded at Rs 97.840 million.

According to information available from the Pakistan Stock Exchange (PSX), SME Leasing Limited's revenues decreased by Rs 1.211 million compared to the corresponding period last year, while overall administrative expenses increased by Rs 3.756 million, including an advance tax charge of Rs 4.539 million. Financial charges also rose by Rs 7.985 million. The loss before tax for this period was Rs 124.401 million, compared to Rs 12.635 million in the same period last year.

The company's total assets experienced a decrease of Rs 242.440 million, attributed to the provision of NPLs and the adjustment of security deposits amounting to Rs 125.954 million. Current liabilities decreased by Rs 112.493 million, and non-current liabilities decreased by Rs 5.524 million. Despite the financial challenges, the company remains committed to continuing its efforts to recover from the infected portfolio to meet operational expenses.

The winding down of SME Bank, the major shareholder of SME Leasing Limited, has officially commenced, with the company pledging to keep shareholders informed of developments. The board of directors acknowledges the continued support from shareholders, lenders, regulatory authorities, and the dedication of the management team and staff members during this transition period.