|Triple B for Senkadagala
Fitch Ratings Lanka Ltd. (FRL) assigned SL BBB (pronounced SL triple BBB) national credit rating for the implied long term unsecured senior debt of Senkadagala Finance Company Ltd., says a press release.
SL BBB rating denotes that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.
The rating takes into account SFs strong balance sheet indicators, long operating history and superior performance, but is also constrained by the size of its balance sheet. The implied support by the much larger holding company has also been factored in the rating.
SFs performance reflects the efficient operating systems & controls and managements conservativeness. High levels of automation and lean staffing has resulted in the lowest cost to income ratio in comparison to its peers. Despite being a small player, managements focus on profitability over growth has enabled SF to be the fourth most profitable finance company in absolute terms.
SFs asset quality indicators compare well in relation to its peers and are backed by prudent provisioning policies and an effective monitoring system. This asset quality is further supported by SFs capital ratios which are high. The equity/assets ratio was 33% as at March 2001, compared with an industry average of 15%. Creditably, the equity/assets ratio has recorded steady improvements over the last three years. Funding is stable, and comprises customer deposits (63%) and equity (37%).
SF was established in 1968. With branches in Kandy & Colombo it is one of the smaller finance companies out of a total of 25 finance companies. Fitch Ratings Lanka Ltd is a joint venture between Fitch Inc. USA, International Finance Corporation Washington, Central Bank of Sri Lanka and several other leading local financial institutions. Fitch, is one of the three full service international credit rating agencies with a rating presence in 75 countries and 40 offices worldwide.
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