Dialog Axiata PLC is clearly upping its game in the financial technology (fintech) space following its majority stake purchase in Colombo Trust Finance PLC (CTF), as the telco plans to set up the country’s first digital bank by first quarter of next year (1Q18).
Dialog acquired 80.34 percent of CTF from Cargills Bank Limited in a September deal valued slightly below Rs.1.1 billion.
After the acquisition Dialog said CTF was the best possible buy due to its clean loan portfolio and small operating volumes, which minimize legacy.
By the end of June 30, 2017, CTF had a loan book of little over Rs.1.1 billion and the non-performing loan ratio stood at 6.0 percent—a moderate level for a company in the licensed finance sector.
The company has 43 employees with two branches.
Shortly after the transaction, Dialog said it was infusing Rs.550 million to make up for the balance capital required to bring up CTF’s core capital base up to the regulatory minimum of Rs.1 billion required by January 1, 2018.
Currently, CTF has a core capital of Rs.450 million.
The transaction will be fully completed by end of November by which time the mandatory offer by Dialog to purchase the remaining shares of CTF will have been closed.
Dialog said it is designing new lending and liability products to be launched once the new digital bank comes into operation by 1Q18.
Dialog will run the company as a standalone business entity, managed independently by the management team appointed by them.
Dialog, possibly can command the largest market shares in the financial services industry in Sri Lanka going forward when its advanced fintec solutions enables its 11.8 million subscriber base to deposit, transfer, withdraw money and apply for a loan or an insurance policy through mobile devices.