ICRA Lanka Limited, a group company of Moody’s Investor Services, has upgraded the credit rating of Lanka ORIX Leasing Company PLC (LOLC) and its financial services subsidiaries LOLC Finance PLC (LOFC) and Commercial Leasing & Finance PLC (CLC) to [SL] A with stable outlook from [SL] A- with stable outlook.
“The ratings continue to factor the LOLC group’s long track record in the retail finance sector, its leadership position in the Sri Lankan retail finance market, professional and experienced management team and adequate risk management systems with strong retail franchise.”
“ICRA Lanka’s assessment to revise the ratings follows the improvement in the asset quality and profitability indicators of LOLC over the last 12-18 months. The group GNPAs improved to 2.8 percent as in March 2015 as compared to 4.9 percent in March 2014 and the consolidated Return on Assets (RoA) improved to 3.1 percent for FYE2015 as compared to 1.9 percent in FYE2014.“
Along with the upgrade of the credit rating of the company, ICRA Lanka has upgraded the credit rating of the Rs.5,000 million long-term senior, unsecured, redeemable debenture programme and Rs.750 million long-term unsecured redeemable debenture programme to [SL] A with stable outlook from [SL]A- with stable outlook.
Group Managing Director Kapila Jayawardena stated that the upgrade of LOLC’s credit rating reflects the trust and confidence placed on the group by the public as a premier financial services provider in the country.
ICRA Lanka has taken note of the improvements in LOFC’s Asset-Liability Maturity (ALM) profile in terms of moderation in shorter term ALM gaps and improvement in the overall profitability levels.
Further, ICRA has taken into consideration the improved capital adequacy position of LOFC. Core Capital which stood at 13.08 percent as in Mar-14 has improved to 13.11 percent as in Mar-15, recording an improvement mainly due to healthy accretion to reserves and total capital which stood at 13.08 percent as on Mar-14 has increased to 18.12 percent, following the subordinated debentures issued by the company during the period.
Along with the upgrade of the credit rating of LOFC, ICRA Lanka has upgraded the credit rating of the Rs.5,000 million listed subordinated, unsecured, redeemable debentures to [SL]A- with stable outlook from [SL]BBB+ with stable outlook.
The upgrade of the credit rating of Commercial Leasing & Finance PLC factors the demonstrated track record of operating profitably in the retail finance segment, its well established franchise combined with a professional and experienced management team, improvement in profitability indicators, comfortable liquidity and its adequate capitalization levels.
Along with the upgrade of the credit rating of CLC, ICRA Lanka has upgraded the credit rating of the Rs.5,000 million listed senior, unsecured, redeemable debentures to [SL]A with stable outlook from [SL]A- with stable outlook.