Finance Rating

August 23, 2007 (LBO) – Lanka Ratings Agency (LRA) has confirmed an A2 long-term institutional rating of Mercantile Investments with a stable outlook.

LRA is a 100 percent-owned subsidiary of RAM Holdings Berhad of Malaysia. RAM is also an affiliate of Standard & Poor’s, the world’s largest rating agency.

Corrected Mercantile Investment is the third largest registered finance company having six percent of the total industry assets in a sector where the two largest players had over 50.6 percent of assets by December 2006.

An ‘A’ rating indicates adequate safety and comes after AA (high safety) and AAA (highest safety) according to the LRA rating scale.

“The ratings are premised on the Company’s sturdy capitalisation, adequate liquidity, average asset quality and moderating but superior financial performance,” LRA said in a statement.

“The key rating driver continues to be its robust capitalisation underpinned by the management’s prudent retention practices.”

Mercantile Investments has shareholders funds of 1.7 billion rupees without revaluation reserves indicating a strong tier-1 capital adequacy ration of 25