Oct 09, 2008 (LBO) – Fitch Ratings Lanka has affirmed the National Long-term rating of DFCC Bank (DFCC) at ‘AA(lka)’ with a stable outlook. The rating agency has also affirmed DFCC’s senior debentures at ‘AA(lka)’ and subordinated debentures at ‘AA-(lka)’ (AA minus (lka)).
Fitch said the ratings reflect DFCC’s strong capital base and sustained high profitability.
But it said the rating also factors in the bank’s “inherent lack of product and funding diversity as a development finance institution (DFI), as well as its relatively large exposure to riskier long-term project finance.”
Fitch said DFCC Bank has been successfully maintaining high levels of profitability owing to the significant component of concessionary-rate credit lines, as well as the support it gets from its large capital base.
As a DFI, Fitch said, DFCC has enjoyed concessionary-rate credit lines from multilateral and bilateral donor agencies.
These loans amounted to 33.7 percent of DFCC’s funding base at FYE08.
However, Fitch said that securing such funds would become increasingly difficult since one of the main criteria is the country’s sta