ICRA Lanka assigns issuer rating of [SL] BBB- with stable outlook to AFC PLC

ICRA Lanka Limited, subsidiary of ICRA Limited, group company of Moody’s Investors Service has assigned the issuer rating of [ SL] BBB- ( pronounced SL triple B minus) with a stable outlook to Alliance Finance Company PLC (“AFCP” or “the Company”). ICRA Lanka has also assigned the issue rating of [SL]BBB- (pronounced SL triple B minus) with a stable outlook to the LKR 1,000 Mn Senior Unsecured Redeemable debentures programme of the Company, currently listed on the Colombo Stock Exchange. ICRA Lanka has also assigned issue ratings of [SL]BB+ (pronounced SL double B plus) with stable outlook to the LKR 480.17 Mn Subordinated Unsecured Redeemable Debentures programme and t he LKR 613.14 Mn Subordinated Unsecured Redeemable Debentures programme of the Company currently listed on the Colombo Stock Exchange.

AFCP is one of the older finance company in Sri Lanka with a track record of more than 60 years. The company has presence in 89 locations (39 branches, 21 microfinance service locations, 12 gold loan centers and 17 collection centers) covering all 25 districts of the country. The company’s key products are leasing, which accounts for 67% of the total portfolio as on June 30, 2017, followed by loans ( 23%), micro finance ( 7%,) gold loans/ pawning ( 2%) and hire purchase ( 1%). In terms of asset classes, 3- wheeler financing ( 21%), car financing (18%), lorry financing (12%), mortgage loans (9%) and van financing ( 8%) were the key constituents of AFCP’s portfolio. The other key asset classes include micro finance (group lending), equipment financing, 2- wheeler financing, which account for 13% of the portfolio. ICRA Lanka notes that the portfolio growth is expected to remain at about 20-25% over the near to medium term with focus on 4- wheeler financing.