Fitch Ratings Reports - 11 APR 2005

Fitch Rating Financial Statement - 11 APR 2005

Senkadagala Finance Company’s (SF) rating reflects its strong asset quality, healthy profitability, and the high capitalisation.

SF experienced relatively high portfolio growth supported by its branch expansion programme. The portfolio grew by 62% during FYE 2004 on the back of the high 93% growth recorded in FYE 2003. The growth momentum has been sustained during the first nine months of FYE 2005, with the portfolio expanding by 33%. Click here to view complete report

Fitch Rating Press Release - 11 APR 2005

Colombo (April 11, 2005) Fitch Ratings Lanka Ltd (FRL) has re-affirmed the BBB+ (sri) national credit rating assigned to the Implied Long-term unsecured Senior Debt of Senkadagala Finance Company Ltd(SF).

The BBB+(sri) 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 economic circumstances and in economic conditions are more likely to impair this capacity.Click here to view complete press release

Investec Press Release - June 2005

Senkadagala Finance Co. Ltd (SFCL), the only investment grade rated Finance Company in Sri Lanka announced the successful private placement of Secured Redeemable Debenture Certificates of approx. Rs.150 million secured through their hire purchase receivable portfolio. Click here to view complete press release

Fitch Ratings Press Release - Colombo, July 05, 2004

Fitch Ratings Lanka Ltd assigns in-principle A (sri) National Long-Term Credit rating to the Lease Backed Trust Certificates (LBTC) to be issued by Senkadagala Finance Trust Three.

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Fitch Ratings Lanka Upgrades Senkadagala Finance Comapany's Credit Rating to SL BBB + - Colombo, December 29, 2003

Colombo (December 29, 2003) Fitch Ratings Lanka Ltd (FRL) has upgraded the national credit rating assigned to the Implied Long-term unsecured Senior Debt of Senkadagala Finance Company Ltd(SF) to SL BBB+

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 economic circumstances and in economic conditions are more likely to impair this capacity.

The rating action reflects SF’s good asset quality, strong profitability and the relatively high capital adequacy. However the rating is constrained due to the relative size of SF when compared with banks and other financial institutions.

SF experienced a portfolio growth of 103% during FYE 2003 followed by a 43% growth during the first half of current financial year. SF continued to maintain relatively high operational efficiency due to its past investments in IT. SF’s asset quality has improved due to a reduction in absolute NPLs. According to the classification standards prescribed for finance companies by the Central Bank, SF’s Net NPL/Equity has improved to -2.3% (ie provisions exceed NPL’s) as at March 2003 (-1.1% in 2002). The improvement in asset quality has been achieved despite high portfolio growth. Nevertheless SF’s challenge in the near term would be to maintain asset quality particularly as the new leases mature over time.

Return on assets (ROA) declined marginally to 5.1% from 5.6% during the FYE 2003 largely due to the high asset growth. Nevertheless SF’s ROA remains at the higher end amongst the financial institutions in Sri Lanka.

SF, to a larger extent has relied on asset backed loans (medium term loans secured by the mortgage of lease receivables) to fund expansion of its loan book. As at Sep 2003, such borrowings accounted for 39% of SF’s funding. Given that the repayment terms of the loans are structured to match lease receipts, SF’s asset – liability maturity structure has improved.

SF is a finance company established in 1968. At present SF is the 7th largest finance company in terms of total assets out of a total of 26 registered finance companies. SF’s business focus is on providing lease finance, particularly vehicle leases, to small & medium sized enterprises. The company has a network of four branches in Kandy, Colombo, Kurunegala and Negombo. SF has been using a relatively sophisticated IT system which has automated operations to a high degree, resulting in high operating efficiency and strong asset quality.

Fitch Ratings Lanka Ltd is a joint venture between Fitch Ratings, USA, International Finance Corporation Washington, Central Bank of Sri Lanka and several other leading local financial institutions. Fitch Ratings, USA is one of the three global full service credit rating agencies and rates over 85 sovereign nations, 7,600 structured finance ratings, 2,900 international banks and financial institutions. Fitch Ratings Inc. has over 90 years’ experience in credit analysis and a combined analytical and professional staff of more than 1,400 many of whom possess over 10 years of specialised industry experience.

More details of the Credit Analysis Report can be obtained from the Fitch Ratings Lanka website