LB Finance rating rises to A-/P2, heralding a stable outlook

Monday, 28 November 2011 00:00 -     - {{hitsCtrl.values.hits}}

RAM Ratings Lanka has upgraded LB Finance Plc’s long term and short term institution ratings, from BBB+/P2 to A-/P2, affirming the stable long-term outlook of the financial giant, a release from the Rating Agency said.

The upward-revision strongly reflects the dominant position the company enjoys in the financial sector in terms of its portfolio of financial products dominated by leasing, hire purchase, gold loans and fixed deposits.

LB Finance has been recording sustained growth in recent years, with market share increasing from 7.36% as at end-March 2007 to 13.90% as at end-March 2011, indicating the rising popularity of the product range and the company’s proficiency in providing customers with competitive and advantageous rates as well as benefit packages.

“That our investor-base has continued to grow from strength to strength is a huge vote of confidence for the company, and we look at it humbly as evidence of the success story our product portfolio has painted in the lives of our customers,” LB Finance Plc Managing Director Sumith Adhihetty said.

The long-term stability alluded by A-/P2 is resonated in the robust performance of the Company in the first half of Financial Year 2012. Pre –Tax Profit stood at Rs. 1.02 billion at end-September 2011, a massive increase of 41% from end-September 2010.

Total asset base grew steadily by 23% to Rs. 34.73 billion as at the end of the half year, supported by a sturdy loan base. As an added accolade, the value of LB Finance’s non-performing loans declined by about 5% by end-September 2011  and  gross non-performing loan ratio saw  a reduction from 3.38% recorded as at end-March 2011, to 2.53% as at end-September 2011, aided substantially by slow accrual of new NPLs and disciplined recoveries.

Net Interest Margin widened over the half year, reflecting higher investment returns   with a lower cost-to-income ratio.

LB Finance Deputy Executive Chairman and renowned entrepreneur Dhammika Perera under whose direction the company was propelled to great heights, was a happy man.

“RAM Ratings upgrading our rating to A-/P2 is not a small achievement for the company. It acknowledges the success LB Finance has been experiencing throughout its 40-year journey while simultaneously raising the bar for our team for higher achievement and better prospects,” Perera said.