In a bid to stem losses and tackle with an industry contraction, Promise Co., the Tokyo-based consumer lender, which closed 158 branches over the past one year, may halve its branch network again, reported Bloomberg quoting Ken Kubo, president of Promise.
For the six months ended September 30, 2009, Promise’s net income decreased 23% and revenue dropped 13% as loans decined. Promise had even left its full year profit forecast of JPY14.8 billion unchanged. Against this back drop, the company is said to follow its rival Acom Co. in cutting costs as the government plans new set of rules to cap interest rates and loan volumes.
Reportedly, Promise may also securitize JPY20 to JPY30 billion in loans to bolster finances. The company is expected to seek the support of Sumitomo Mitsui, which has 21% stake in it, in such a sale to investors.
In an interview with the news agency, Mr Kubo said: “Hundreds more consumer finance companies may go out of business if the government introduces planned regulations. We’re concentrating on surviving, and have our hands full, but industry-wise many companies aren’t likely to make it.
“Promise will seek to boost profit by reducing costs without any exceptions and by pulling out of unprofitable areas into which the company has diversified in recent years.”
