Lankapage Logo CP 21 YEARS
Go Home Home Serving the Sri Lankan community globally since 2000
go to LankaPage.com

Leading News from Sri Lanka::

* ICRA Lanka reaffirms the ratings of LOLC Holdings PLC and rating watch with developing implications removed
Thu, May 21, 2020, 07:39 pm SL Time, ColomboPage News Desk, Sri Lanka.

May 21, Colombo: ICRA Lanka, a subsidiary of Moody’s Investors Service, has reaffirmed the issuer rating of [SL]A for LOLC Holdings, while revising the outlook to Stable from rating watch with developing implications.

ICRA Lanka has taken the consolidated view of the LOLC group, which has interests in various segments including financial services, insurance, manufacturing, trading, plantation, renewable energy, and leisure when arriving at the ratings, a media release said.

ICRA Lanka has also reaffirmed the issue rating of [SL]A for the LKR 5,000 Mn Listed Senior Unsecured Redeemable Debenture Programme, the issue rating of [SL]A for the LKR 2,000 Mn (remaining balance of the LKR 2,750 Mn) Listed Senior Unsecured Redeemable Debenture Programme, and issue rating of [SL]A1 for the LKR 1,000 Mn Commercial Paper Programme; rating watch with developing implications placed on the aforementioned issue ratings has been revised to Stable outlook.

On April 10, 2020, LOLC Group has divested 70% of its stake in PRASAC for a total consideration of about USD 603 Mn. The investment was held by LOLC International Private Limited (LOLCIPL), a fully owned subsidiary of LOLC holdings, incorporated in Singapore.

Accordingly, LOLCIPL has received USD 422 Mn being the first tranche of the sales proceeds, in line with the share purchase agreement that had been entered into by the parties. The Group has used a significant portion (about USD 130Mn) of the proceeds to repay the debt at the holding company level. The balance sales proceeds amounting to USD 181 Mn will be received in 2022.

ICRA Lanka takes cognizance of the improvement of the capitalization profile of the holding company, with standalone gearing expected to moderate to about 0.80x vis-à-vis 1.83x in December 2019 and 1.62x in March 2019. Consolidated Group gearing is also expected to moderate to about 3.7x vis-à-vis 6.3x in September 2019.

The rating also factors the significant moderation of the overall size and scale of LOLC Group, post divestment.

As in September 2019, PRASAC accounted for about 45% of group assets and about 57% of the Group’s loan book. Also, PRASAC accounted for about 70% of the LKR 19.6 Bn PAT reported by the Group in FY2019.

With the divestment of PRASAC, the Group’s overall size will significantly reduce, and the Group’s overall profitability will also moderate as PRASAC’s high yielding microfinance operation generated higher profits.

The rating also factors in the weakened asset quality (consolidated NPAs of the local NBFIs increased to 7.25% in Sep-19 from 5.29% in Sep-18) and earnings profiles (consolidated RoA moderated to 1.34% 1in H1FY2020 vis a vis 1.61% in H1FY2019) of the Sri Lanka based NBFCs (LOLC Finance PLC, Commercial Leasing & Finance PLC and LOLC Development Finance PLC) of the group over the recent past, which would account for the 60% of the group’s assets post PRASAC divestment and, drive the group level performance over the near to medium.

Post the divestment of PPRASAC, ICRA Lanka expects the consolidated profitability to moderate further as PRASAC was the most profitable (RoA2 of 3.69% and 3.81% respectively of the 11MCY2019 and CY2018) subsidiary of the Group.

 

ColomboPage - Recent 10 Stories ::
Sri Lanka President authorizes over Rs. 1 trillion from Consolidated Fund to run the government
-- [2 hours ago]
Agri Department launches special program to control Yellow Spotted Grasshopper
-- [4 hours ago]
Sri Lanka to hold polling rehearsal tomorrow to conduct elections amid COVID-19
-- [4 hours ago]
Coronavirus update: Sri Lanka COVID-19 cases rice to 1814 with 13 new cases Saturday
-- [5 hours ago]
President Promotes 19 more SLAVF Majors to next rank
-- [5 hours ago]
Lebanon agrees to conduct free PCR tests for Sri Lankans seeking to be repatriated
-- [6 hours ago]
Two Sri Lankans jailed for 8 months in Singapore over forged passport
-- [6 hours ago]
Gowri Ramanah appointed as Government Analyst
Election Commission issues media guidelines and code of conducts for political parties contesting election
236 Sri Lankan ship crew to be flown home today

Copyright © 2000, 2020 by LankaPage.com (LLC) :
The news and other contents on ColomboPage are copyrighted property of LankaPage.com, LLC. Any unauthorized use of any information on ColomboPage may constitute a violation of copyright laws. You need written permission to reproduce, republish, post, transmit, broadcast or distribute, material from this site from LankaPage.com, LLC. However, news organizations or broadcasters in Sri Lanka may republish the news items in ColomboPage with proper acknowledgment to ColomboPage.