Lasco Financial preps for full return to income tax roll

Lasco Financial Services 50 per cent tax waiver comes to an end a year, from now but the company is already making plans to offset the expected impact on its bottom line by aggressively growing revenue.

Its new LascoPay-branded Mastercard, RIA remittance services, and other products are key to that strategy.

“What we need to be prepared for is, the remission of taxes will end in October 2020,” said Managing Director Jacinth Hall-Tracey at Lasco Financial’s annual general meeting this week.

It means the company will have to grow revenues or cut expenses, she said at the meeting on Monday in New Kingston.

“The business is generating strong profits; however, not enough for the high cost of finance,” Hall-Tracey added in relation to the latest quarterly results for Lasco Financial, which now earns the bulk of new revenue from microloans, but whose core revenue comes from remittances.

The company reported revenues of $654 million for its first quarter ending June, up $100 million over the 2018 period. The increase was driven by growth in transactions mainly from its loans business. Net profit fell nine per cent to $91 million due to expenses to integrate acquisitions that were made the previous year.

The acquisition also helped drive up Lasco Financial’s annual revenue for year ending March 2019 to $2.2 billion, from $1.6 billion the previous year. Profit for the year grew to $282 million from $254 million in 2018.

Cash-to-bank remittance service

Lasco Financial operates the largest MoneyGram agent network in Jamaica, but is expecting more growth from that business segment with the addition of RIA remittance services in the June quarter. RIA is the third-largest remittance company globally and importantly, will allow cash-to-bank services, Hall-Tracey said.

“MoneyGram doesn’t offer cash to bank, and when you look at the trend and statistics from Bank of Jamaica, it is clear that more persons are moving away from the legacy method of coming to stores to collect cash,” she said.

Jamaica’s remittance market continues to grow, albeit at a slow and declining pace. The Bank of Jamaica, which has oversight of the market, has taken note of the faltering growth rates, as well as the emerging non-traditional methods through which remittances are flowing to Jamaicans, including mobile money platforms, to determine whether and how to count those flows.

At half-year June, remittances were up by less than two per cent industrywide, at US$1.16 billion. The central bank does not report on market share.

Lasco Financial is currently preparing to formally launch LascoPay. In the third quarter ending December, it will install new remittance software; and launch an online loans-application service built on new loan management software in the fourth quarter.

The LascoPay card will allow card-to-card and bank-to-card transfers. This means, for instance, that users can get their microloans loaded on the card rather than cash. Users can also send funds to other account holders, and also pay for goods and services anywhere Mastercard is accepted. Companies can use the card as a lunch voucher system for employees and also for payroll services.

“We have the power of offering a mobile app which is attractive for employers to manage payroll and other allowances. So you can even order lunch from select vendors through the app,” Hall-Tracey said.

Chairman Lascelles Chin believes they can find a market for the card among small businesses that trade with Lasco Distributors Limited, a sister company to Lasco Financial.

“We are going after our organic ecosystem, which is not as readily available to other competitors,” added Hall-Tracey on the point raised by Chin.

As a junior market company, Lasco Financial received five years of full waiver from corporate taxes, dating from October 2010 when the company listed on the Jamaica Stock Exchange, and another five years of a 50 per cent waiver, four of which have now elapsed.

steven.jackson@gleanerjm.com