Oct 03, 2011 (LBO) – RAM Ratings Lanka has assigned long- and short-term financial institution ratings of B- and NP to Prime Grameen Micro Finance Ltd. with the long-term rating having a stable outlook.
The Company’s capitalisation levels are deemed moderate. Its shareholders’ funds had recovered to LKR 242.14 million by end-July 2011 (end-FY Mar 2011: negative LKR 2.22 billion), underpinned by the aforesaid capital injection and the restructuring of its balance sheet. As such, Prime Grameen’s tier-1 and overall risk-weighted capital-adequacy ratios (RWCARs) came in at 8.98% and 13.02%, respectively, as at end-July 2011. Nevertheless, we note that its capitalisation levels will be eroded until the Company returns to profitability.
“The company’s ratings are pressured by its small size, weak asset quality, performance and liquidity, and short track record after the change of ownership and restructuring,” a statement said.
Prime Grameen established as a micro-financing institution in 2000, under the Ceylinco group, pioneered the Grameen micro-financing model in Sri Lanka, involving disbursement of small-ticket loans to self-employed individuals at the grassroots levels.