Islamabad, According to information available from the Pakistan Stock Exchange (PSX), SME Leasing Limited has disclosed its financial performance for the third quarter ended September 30, 2023. The un-audited Condensed Interim Financial Statements reveal a significant focus on recoveries from problematic and non-performing loan (NPL) portfolios, with total recoveries amounting to Rs. 30.83 million. Despite these efforts, the company recorded a substantial loss before tax of Rs. 41.17 million, contrasting sharply with a modest profit in the same period last year.
The period saw the company aggressively pursuing early settlements and legal processes to manage its non-performing assets, resulting in a net reversal of provisions worth Rs. 2.89 million. Fresh business generated during the quarter was limited to Rs. 2.17 million. Meanwhile, revenues fell by Rs. 4.51 million compared to the corresponding period last year, reflecting ongoing operational and financial challenges.
The company’s financial stability is further strained by a decline in net equity, dropping to a negative Rs. 33.41 million from Rs. 7.85 million in December 2022. This decline is attributed to the current quarter's losses and ongoing funding constraints, which have hindered the company’s transition to profitability.
Additionally, SME Leasing Limited's license has been on hold since May 20, 2019, as it has not met the minimum equity requirement of Rs. 50 million mandated for non-deposit leasing companies. The company’s liabilities structure has also deteriorated, with an increase in both current and non-current liabilities and a decrease in total assets, primarily due to the maturation of lease financing.
In a broader strategic context, the holding company, SME Bank Limited, is undergoing a winding-down process approved by the federal cabinet. This situation has left SME Leasing Limited without a viable forward plan, leading to delays in financial reporting and unresolved board vacancies. The company awaits further nominations for its board from SME Bank Limited, which holds a 73.14% share.