Lasco Financial positions for growth
Published:Sunday | December 12, 2010 | 12:00 AM
Avia Collinder, Business Writer
Lasco Financial Service Limited (LFSL) has tapped two of its business lines for expansion - payday loans and MoneyGram services -
It has also put on the rental market a 5,800 square-foot property located in the high-rent business district of New Kingston.
Lasco Financial is negotiating with an undisclosed party to act as agent for 10 MoneyGram outlets.
The international money-transfer service has an expansive network of multiple agents in Jamaica - of which Lasco Financial is but one with four outlets of its own - and who, together, offer the service at 518 locations nationally.
Lasco Financial sees promise in the MoneyGram business, which it describes as a core operation, having noted a strong 30 per cent improvement in sales from the money-transfer service in the first half of its financial year ending September 30.
While the company broadly saw a 12 per cent or $11-million improvement in revenue at half-year to $108-million, top-line income in the July-September period, the second quarter contracted two per cent, or by $1 million to $55 million.
Lasco Financial's MoneyGram plan includes a deal with an undisclosed local company with operations across Jamaica.
The transaction has to be ratified by the central bank, which regulates the remittance market.
"We have the applications," said Lasco Financial managing director Jacinth Hall-Tracey. "However, as the locations are subject to approval by the Bank of Jamaica, we do not want to appear presumptuous in our announcements."
As part of the agency relationship, the financial firm will not staff the locations.
"Agents are paid a commission," she said.
Hall-Tracey is also developing a more aggressive sales strategy for LFSL's payday loan plan, which involves the deployment of sales staff to service subscribers at their place of employment. By doing this, the firm will be able to verify employment and reduce default and other risks.
The segment is targeted for 30 per cent growth in the medium term.
The service will be tested in Kingston and expanded nationwide, depending on the success there.
"We are just testing the market," Hall-Tracey told Sunday Business. Borrowers who meet all the criteria for the loan - including full-time employment, having the capacity for repayment by salary deduction, and being deemed as possessing appropriate debt-servicing ratios - will pay interest of one per cent per week, or 52 per cent per annum.
Higher risk
Others who will require guarantors and represent a higher risk will be asked to pay 1.5 per cent per week, or 78 per cent per annum. The repayment period is a maximum nine months.
Lasco has set the debt-service limit for qualifying applicants at 30 per cent of take-home pay.
A sales executive and a loan administrator were recently recruited to push the product, and additional staff will be added as needed, according to Hall-Tracey.
Lasco Financial also offers cambio services, a market that grew 16 per cent for the company in the half-year period, and which, according to Hall-Tracey, accounted for 30 per cent of Lasco Financial's total revenue as at October.
Bank of Jamaica data obtained by Sunday Business show the company holding steady at No. 7 in a market of 68 players, with volume sales of US$95 million between January and November 17 (see insert on C1).
Inside the cambio market, GraceKennedy Currency Services Limited, trading as FX Traders, is the dominant player with volume sales of US$469 million in the same period.
Market stable
The cambio market in 2009 did US$11.2 billion of business overall.
"Except for the market adjustments from the debt exchange, the foreign-exchange market has been pretty stable, (and) if the global economy continues to show signs of improvement, especially the United States, we will continue to see improvements in supply, especially in the retail (sector)," Hall-Tracey said.
General operational costs, the general manager said, had risen, due to the firm's expansion of the retail operations, including the addition of two cambios in 2008.
Higher cost centres also included advertising and cash floats, which have pushed up bank charges.