June 21, 2007 (LBO) – A 5-year, two billion rupee debenture issue of DFCC Bank has been assigned a rating of AA (lka) while the bank’s long-term rating of the same level has been confirmed, Fitch Ratings said. The rating agency also confirmed the AA- (lka) tag of DFCC’s subordinated debt was also confirmed. The outlook of the ratings is ‘Stable’.
“DFCC’s ratings reflect its strong financial profile, good asset quality and strong capital position among banks in Sri Lanka,” Fitch Ratings said.
“It also takes into consideration DFCC’s greater exposure to riskier long term project lending and less diversified funding base.”
Fitch says the AA (lka) national rating denotes a very strong credit risk relative to other issuers or issues in the same country.
“The credit risk inherent in these financial commitments differs only slightly from the country’s highest rated issuers or issues,” the agency said.
The Banks profitability, measured by return on assets, had fallen to 3 percent at during the third quarter of 2007, from 3.5 percent at end 2006 with the effective tax rate climbing 51 percent from 41 percent.
Commercial Bank of Ceylon Limited, a 28.99 percent-owned associate, put in 44