LB Finance awarded ‘A+’ by LRA

LB Finance PLC, one of Sri Lanka’s largest licensed finance companies, has been awarded an ‘A+’ credit rating, with a Stable outlook, by Lanka Rating Agency (LRA), underscoring the company’s strong credit fundamentals, superior asset quality and robust capital position. 

The rating places LB Finance among the top-tier non-banking financial institutions in the country. 

The ‘A+’ rating is based on the company’s financial performance and position as at end-September 2025, reflecting its solid market standing, resilient profitability and disciplined risk management framework.  As at September 2025, LB Finance accounted for 12.3 percent of total sector assets and 12.4 percent of sector deposits, highlighting its scale and systemic relevance within the licensed finance company sector. 

For the six months ended September 2025, LB Finance recorded a profit after tax of Rs.5.8 billion, representing a 23.7 percent year-on-year increase. Net interest income for the six-month period amounted to Rs.14.2 billion, supported by timely repricing of assets and effective balance sheet management.  The company delivered a full-year FY25 profit after tax of Rs.10.8 billion, with a return on equity of 22.8 percent in FY25 and 21.9 percent for the first half of FY26, demonstrating sustained earnings strength. 

A key driver underpinning the rating is LB Finance’s exceptional asset quality, which remains significantly stronger than the industry peers. As at September 2025, the company reported a gross non-performing loan (NPL) ratio of 1.55 percent and a net NPL ratio of -1.36 percent, supported by a provision coverage ratio of 187.7 percent, reflecting conservative provisioning practices and prudent credit risk management.  The company’s capital strength as at September 2025 was also a major rating positive. LB Finance reported a total capital adequacy ratio of 23.66 percent and a Tier 1 capital ratio of 22.74 percent, comfortably exceeding the regulatory minimum requirements of 14 percent and 10 percent, respectively. 

Commenting on the rating assessment, LRA CEO Dr. Kenneth De Zilwa stated, “The ‘A+’ rating is anchored on LB Finance PLC’s superior asset quality metrics, strong capitalisation profile and demonstrated ability to generate stable earnings across operating cycles. The company’s provisioning buffers, liquidity management and disciplined credit underwriting provide a high degree of balance sheet protection, which is critical in the current macroeconomic environment. Our assessment recognises LB Finance PLC as a structurally resilient institution with the governance depth and financial flexibility required to sustain growth without compromising credit fundamentals.”  Subsequent to the September 2025 rating reference period, LB Finance sustained its strong performance through the nine months ended December 31, 2025. The group recorded a profit after tax of Rs.9.0 billion, reflecting a 26 percent year-on-year growth, supported by its established market leadership, experienced management team, sound governance framework and continued focus on sustainable growth.