Fitch Ratings Lanka this week affirmed Sri Lanka's Central Finance Company PLC's (CF) National Long-term rating at 'A+ (lka)' with a stable outlook.
A Fitch statement said due to current challenging macroeconomic conditions, loan growth slowed to 11% in FY08 from 29% in FY07, with the portfolio continuing to shift towards vehicle hire purchase agreements (HPs).
Vehicle financing (leasing and HPs) accounted for 89% of the loan book in FYE08 while loans accounted for the balance of the portfolio. In the six month period to September 2008 (H109), HPs accounted for 28% of the loan book up from 16% at FYE07.
The statement said that although the majority of CF's assets are financed by customer deposits, growth has been increasingly funded by bank borrowings (17% of the funding mix at H109 versus 7% at FYE05).
Interest rate swaps of Rs 2.6 billion at FYE08 (40% of borrowings at FYE08) have minimised market risk. Internal capital generation was strong, with high margins, low cost structures (cost/income ratio was 41% in H109) and a strong retention policy; overall capitalisation remained strong at 22% of assets at H109.
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