Sept 28 (LBO) – Fitch Ratings Lanka said it has confirmed DFCC Bank’s (DFCC) national long-term rating at ‘AA(lka)’ with a stable outlook. It also confirmed the bank’s senior debentures at ‘AA(lka)’ and subordinated debentures at ‘AA-(lka)’, also with a stable outlook.
“The ratings are driven by the bank’s strong capital base as supported by continued periods of high profitability,” Fitch Ratings said in a statement.
“The ratings are however constrained by DFCC’s inherent lack of funding diversity and relatively larger exposure (compared to the bank sector) to high risk project finance.”
Although DFCC’s main focus as a development financial institution continues to be long-term project finance, it has been increasing commercial banking through its subsidiary DFCC Vardhana Bank (DVB) under its diversification strategy.
Long-term project loans accounted for 36 percent of group assets in the 2009 financial year compared with 45 percent in 2004.
These are largely matched with long-term borrowings which funded 33 percent of assets in the 2009 financial year.
Long-term borrowings have largely been sourced via multil