April 23, 2008 (LBO) – Sri Lanka’s Fitch Ratings has upgraded Sanasa Development Bank’s speculative grade by one notch to BB(lka) with a stable outlook, the rating agency said. “The upgrade reflects the materialisation of SDB’s planned capital program, and is supported by the bank’s good profitability and asset quality, albeit constrained somewhat by the risks inherent to the microfinance (MFI) segment,” Fitch said in a statement.
In 2006, the Central Bank of Sri Lanka (CBSL) increased the minimum capital requirement for licensed specialised banks to 1.5 billion rupees with 50 percent of the capital needed by the end of 2008 and the balance in 2009.
Sanasa had raised 330 million rupees in new capital from the thrift and credit societies movement and from local and foreign institutions. The bank had told Fitch that a further 550 million rupees in capital would be infused by the end of 2009.
At the end of the 2007 financial year Sanasa had equity of 840 million rupees.
Loan growth in the 2007 financial year was high at 48 percent (51 percent in 2006), driven by housing loans and micro finance loans.
SDB is primarily involved in micro finance lending thr