After booking the last big chunk of bad-debt provisions and covering substantial expenses related to the takeover of Tanabun for the Q3 financial period, SET-listed motorcycle leasing company Group Lease Public Company Limited (GL) expects to make a significant financial turnaround starting from the current quarter and well into next year.

“The worst is over. From now on, we start to harvest and enjoy the fruits (that we have grown),” GL’s Chairman and Chief Executive Officer Mr. Mitsuji Konoshita stated today. Mr. Konoshita’s upbeat comments came after the company last weekend reported Q3 results which showed further declines in profits due to high provisions for bad and doubtful debts and the booking of substantial expenses arising from the takeover of Tanabun in June this year.

Mr. Konoshita maintained that the high provisions will become a thing of the past as Thailand’s grassroots economy recovers from the Government’s stimulus programs and GL clients who had missed payments in the past return to pay installments on time. The grassroots economy forms the lifeline of GL’s client base. Mean while, expenses related to Tanabun’s takeover were one-time write-downs.

“Looking ahead, we are confident that our performance will improve significantly starting in the current quarter and well into the years ahead since the (expanded) Thai operations are projected to produce better numbers while importantly, our Cambodia operations have started to contribute profits and are projected to make bigger contributions as the business there expands rapidly,” Mr. Konoshita stated.

GL’s stand-alone net profits came in at 22.25 million baht in the third quarter this year, marking a 63.34% drop from the same period last year while consolidated profits decreased to 3.85 million baht, or a whopping 91.57% reduction from the 45.66 million baht profits recorded in the third quarter last year. The profit differences in the GL’s stand-alone and consolidated results were owing to the fact that Tanabun, which is engaged in the similar motorcycle leasing business, was acquired by GL this year and its portfolio was not in last year’s consolidation.

Mr. Konoshita stated that interest incomes from the leasing operations have continued to increase, which underscores GL’s corporate strategy to keep on expanding despite economic bad times so that it can reap handsome profits when the good times return. On a consolidated basis, revenue from interests rose 43.40% from 331.01 million baht in the third quarter last year to 474.60 million baht in the same quarter this year. The combined 143.59 million baht increases comprised of a 20.76 million baht revenue growth from GL, 95.83 million baht from Tanabun plus another 27 million baht from GL’s foreign subsidiaries notably GL Finance (GLF) which is responsible for the Cambodian business.

Meanwhile, consolidated expenses rose 61.44% in this quarter – from 103.16 million baht last year to 166.54 million baht this year – a large part of which was related to the Tanabun takeover. At the same time, provisions for bad and doubtful debts also shot up 43.79%, from 96.43 million baht to 138.66 million baht but the bulk of the incremental portion was accounted for by extra reserve for Tanabun’s portfolio that was consolidated for the first time in this quarter. It was noted that these provisions will drastically drop from now on in light of the improving economy.