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Ram cuts Sanasa Bank’s outlook; retains rating

26 August 2013 05:42 am - 0     - {{hitsCtrl.values.hits}}

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The ‘outlook’ on Sanasa Development Bank PLC (SDB), a licensed specialized bank (LSB) has been revised to ‘stable’ from ‘positive’ by Ram Ratings Lanka, with respective long and short term ratings at BBB and P3.
 
“The revision reflects a trend of weakening asset quality amidst an accretion in non-performing loans (“NPLs”) as well as the Bank’s moderated performance,” Ram Ratings said.
 
SDB is a relatively LSB, accounting for 3.35 percent of the LSB industry’s assets as at end-December 2012.
 
It operates as the apex financial institution of the Sanasa movement, which is the largest co-operative network in the country, with the objective of catering to the funding needs of the rural community.
 
“We deem SDB’s asset quality to be average, underpinned by good collections stemming from the Bank’s group lending system and proximity to its clients through the Sanasa co-operative network,” Ram Ratings Lanka said.
 
SDB predominantly provides micro-financing to the low-income tier of the economy, which usually lies outside the risk parameters of commercial banks.
 
SDB mainly disburses loans to Sanasa members through grassroots-level primary societies, to non-members through the Bank’s own group lending scheme under which loans are mutually guaranteed by group members, as well as to small- and medium-sized enterprises (SMEs).

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