Business News: Fitch Ratings (Lanka) has affirmed LB Finance PLC’s National Long-Term Rating at ‘A-(lka)’. The Outlook is Stable.
At the same time, Fitch has affirmed the company’s Sri Lanka rupee-denominated senior unsecured debt at ‘A-(lka)’ and its rupee-denominated subordinated debt at ‘BBB(lka)’.
LB’s National Long-Term Rating is driven by its intrinsic financial strength and reflects its established domestic franchise as Sri Lanka’s third-largest finance and leasing company (FLC), accounting for 10% of total FLC-sector assets as at the financial year ending March 2020 (FY20). It also reflects high profitability from high-yielding products and satisfactory capital levels. This is counterbalanced by a high risk appetite due to a large and increasing exposure to gold-backed lending.
Our assessment of the operating environment for Sri Lankan FLCs incorporates the significant economic disruption caused by the pandemic, particularly, the negative implications for FLCs through the effect on their largely sub-prime clientele and any extension of motor-vehicle import restrictions. We expect the country’s GDP to contract by 1.3% in 2020, and for GDP growth to recover in 2021, although growth prospects will partly depend on how the pandemic develops in Sri Lanka and globally. More News