Feb 02, 2011 (LBO) – Sri Lanka’s Fitch Ratings has today confirmed Sri Lanka’s People’s Leasing Company’s long term rating of ‘A(lka)’ with a stable outlook on its potential support from its parent, state-run People’s Bank which is rated ‘AA-(lka)’. Fitch said PLC carries out the incremental leasing business of People’s Bank’s leasing business which was 9 percent of group advances by June 2010 and is the third largest lending segment.
At end-December 2009, PLC contributed 26 percent to group profit. PLC’s operations are influenced by its parent at a strategic level, through full board representation.
The agency says that even on a stand-alone basis, PLC’s credit profile remains strong.
The ratings could be upgraded if there is an improvement in PB’s ability or willingness to extend support, which is linked to an improvement in its stand-alone financial strength or PLC’s strategic importance to PB in terms of profit contribution or business volumes, or greater integration between the two entities, Fitch said.
A weakening of the above factors could lead to a downgrade of PLC’s rating. PLC’s loan growth has been higher than the sector’s over 2007-2010, driven by better access to institutional funds despite a weaker economic climate