To compare the financials of Citizens Development Business Finance PLC (CDB) and LB Finance PLC for the period ending 30th September 2024, the key financial metrics have been summarized in a table format, as outlined below:
| Metrics | CDB (30 Sep 2024) | LB Finance (30 Sep 2024) | Difference |
|---|---|---|---|
| Revenue | Rs. 12,672.4 million | Rs. 23,059.7 million | LB Finance has higher revenue |
| Net Interest Income | Rs. 5,503.4 million | Rs. 12,558.3 million | LB Finance shows significantly higher net interest income |
| Profit before tax | Rs. 2,423.8 million | Rs. 7,570.9 million | LB Finance's profit before tax is significantly higher |
| Profit after tax | Rs. 1,712.8 million | Rs. 4,705.2 million | LB Finance reports much higher net profit |
| Operating Expenses | Rs. 3,336.7 million | Rs. 4,918.4 million | LB Finance has higher operating expenses |
| Total Assets | Rs. 141,731.1 million | Rs. 212,259.9 million | LB Finance's asset base is larger |
| Deposits from Customers | Rs. 80,752.6 million | Rs. 127,824.9 million | LB Finance holds more customer deposits |
| Equity | Rs. 21,401.5 million | Rs. 46,675.7 million | LB Finance has a stronger equity base |
| Earnings per Share (EPS) | Rs. 24.17 | Rs. 8.50 | CDB has higher EPS |
Key Insights:
- Revenue: LB Finance generates almost double the revenue of CDB, indicating larger operations.
- Net Interest Income: LB Finance shows a much higher net interest income compared to CDB, suggesting a stronger core financing business.
- Profitability: LB Finance's profitability in terms of both profit before and after tax significantly surpasses that of CDB.
- Assets and Liabilities: LB Finance has a larger asset base and holds more deposits from customers, signifying a broader reach in financial services.
- Equity: LB Finance has a stronger equity base, which reflects higher financial stability.
This comparison highlights LB Finance’s dominant position in terms of revenue, profit, and overall size compared to CDB.
Operational Efficiency Insights
Cost-to-Income Ratio: This is a key measure of operational efficiency. LB Finance has a lower cost-to-income ratio of 39.1%, compared to CDB’s 60.6%. A lower ratio indicates that LB Finance is managing its expenses more effectively relative to its income, which suggests higher operational efficiency.
Operating Expenses: While LB Finance has higher absolute operating expenses (Rs. 4,918.4 million vs. Rs. 3,336.7 million for CDB), its ability to generate significantly more revenue and profit offsets these higher costs. This results in a more efficient cost structure for LB Finance.
Profit Margins: Despite higher expenses, LB Finance achieves better profitability due to its efficient operations and higher income generation. This indicates that LB Finance’s operations are better optimized for cost control and income maximization.
Comment on Operational Efficiency:
LB Finance is clearly more operationally efficient than CDB, as evidenced by its lower cost-to-income ratio and higher profitability despite larger operating expenses. This suggests that LB Finance is better at scaling its operations and controlling costs relative to its income, giving it a competitive edge in the financial services sector. In contrast, CDB’s higher cost-to-income ratio indicates it has room for improvement in cost management and operational efficiency.
In summary, LB Finance not only leads in revenue and profitability but also demonstrates superior operational efficiency, making it a more robust player in the financial market.
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