LB Finance’s National Rating at ‘BBB+(lka)’;

Fitch Ratings has affirmed Sri Lanka-based LB Finance PLC’s National Long-Term Rating at ‘BBB+(lka)’. The outlook is stable.

The rating reflects LB’s intrinsic financial strengths, which are driven by better profitability and asset quality than those of peers. These are counterbalanced by a greater exposure to market risk due to a significant gold-backed lending business.

The rating also reflects the company’s established domestic franchise as Sri Lanka’s second-largest finance and leasing company (FLC).

“We expect the stabilising operating environment to support LB’s ability to generate and defend business volumes, particularly in its core products of vehicle-backed financing and gold loans. Vehicle financing made up 48% of gross loans at the end of the financial year March 2024 (FY24), compared with 47% at FYE23 and 57% at FYE22. Its expansion should be supported by a potential removal in vehicle import restrictions. Gold loans’ share of 44% of the book (FYE23: 44%, FYE22: 32%) is likely to moderate marginally over the medium term as vehicle financing picks up.

“We expect planned loan-book growth and continued recovery efforts to support LB’s asset quality as the economy stabilises. LB’s gross impaired (stage 3) loans ratio of 4.1% at FYE24 (FYE23:

Source:Daily News