Sept 10, 2007 (LBO) – Fitch Ratings Lanka has confirmed DFCC Vardhana Bank Limited’s (DVB) National Long-term rating at ‘AA-(lka)’ with a stable outlook. “The principal factor supporting DVB’s rating is the strong implied support assumed to be available from its parent DFCC Bank,” Fitch Rating said.
“DVB is envisaged to play an important strategic role in DFCC’s future plans. In addition to DFCC’s controlling stake and the use of a common franchise, the operations of DVB are closely integrated with those of DFCC.
“Hence, Fitch believes that DVB will continue to enjoy a high degree of support from DFCC.
DFCC has been rated a notch higher at AA(lka).
The Central Bank of Sri Lanka had directed DFCC to reduce its voting rights in DVB to 15 percent in 2012 or face DFCC’s voting rights being reduced to 10 percent.
“However, given a minority holding of only 4.6 percent, DFCC is likely to retain majority control of the bank,” Fitch said.
Net profit increased by 80 percent to 116.8 million rupees in 2006 on the back of high loan growth supported by cross selling of loans from DFCC, and healthy net interest margins from DVB’s high