The Investor Sentiment - Equity and investments forum for Sri Lankans
Search
 
 

Display results as :
 


Rechercher Advanced Search

Latest topics
» විකුණුම්කරු
Today at 2:10 pm by Ethical Trader

» Real Estate Market in Sri Lanka- A booming Industry or a Bubble?
Today at 12:00 am by xmart

» අනං මනං! #/+?.<>
Yesterday at 10:57 pm by Yin-Yang

» Will YOU VOTE for ME if I run for SL PRESIDENCY?
Yesterday at 11:43 am by CK

» Thread for News on Local and Foreign Politics
Yesterday at 6:52 am by ruwan326

» *කොට්ටේ තරණය කිරීම*
Fri Nov 16, 2018 6:25 pm by Ethical Trader

» Thread for News on CSE and SL Economy
Fri Nov 16, 2018 1:43 pm by The Invisible

» Dividend Announcement
Thu Nov 15, 2018 7:36 pm by nihal123

» COMB.N0000 ( COMMERCIAL BANK OF CEYLON PLC )
Wed Nov 14, 2018 9:20 pm by pjrngroup

» Thread for News on International Markets
Wed Nov 14, 2018 7:56 am by The Invisible

» DIPD.N0000 (Dipped Products)
Wed Nov 14, 2018 7:18 am by The Invisible

» SAMP.N0000 (SAMPATH BANK PLC)
Wed Nov 14, 2018 7:16 am by The Invisible

» TAFL - Three Acre Farms
Wed Nov 14, 2018 7:14 am by The Invisible

» RCL - Royal Ceramics
Wed Nov 14, 2018 7:12 am by The Invisible

» HAYL.N0000 Hayleys PLC
Wed Nov 14, 2018 7:08 am by The Invisible

» How to trade Stock profitably?
Tue Nov 13, 2018 11:55 am by indramal

» What are investing methods in Sri Lanka?
Tue Nov 13, 2018 6:39 am by indramal

» Thread for General News Local/Foreign
Mon Nov 12, 2018 7:57 am by serene

» Anybody invest New York or Landon Stock Exchange?
Sat Nov 10, 2018 8:53 am by කිත්සිරි ද සිල්වා

» JKH.N0000
Fri Nov 09, 2018 10:49 am by ruwan326

» HAYC - Haycarb
Fri Nov 09, 2018 10:30 am by The Invisible

» WATA - Watawala
Fri Nov 09, 2018 10:22 am by The Invisible

» AAIC.N0000
Fri Nov 09, 2018 10:10 am by The Invisible

» Asian markets rally as investors see positive in US gridlock
Fri Nov 09, 2018 8:02 am by serene

» CSE RISE , RIDING ETHICALLY
Wed Nov 07, 2018 5:53 am by pjrngroup

» Constitutional Crisis – close to $ 100mn flees stock/bond markets last week
Tue Nov 06, 2018 6:38 pm by serene

» HHL.N0000 ( Hemas Holdings PLC)
Tue Nov 06, 2018 8:43 am by The Invisible

» Weldone Serene for 4000 + posts
Tue Nov 06, 2018 7:44 am by serene

» Asiri Hospitals PLC - ASIR
Mon Nov 05, 2018 11:58 am by The Invisible

» Flying is the Safest mode of Transport
Sat Nov 03, 2018 8:44 am by කිත්සිරි ද සිල්වා

» REXP.N0000 ( RICHARD PIERIS EXPORTS PLC)
Fri Nov 02, 2018 7:45 pm by Brave Heart

» What MOTTOs/PRINCIPLEs do YOU follow in LIFE ?
Thu Nov 01, 2018 4:14 pm by Seyon

» LDEV - Lankem Developments
Thu Nov 01, 2018 2:23 pm by The Invisible

» NDB.N0000 (NATIONAL DEVELOPMENT BANK PLC)
Thu Nov 01, 2018 12:43 pm by The Invisible

» MTD Walkers (KAPI)
Thu Nov 01, 2018 11:54 am by The Invisible

» SERV - The Kingsbury
Thu Nov 01, 2018 10:12 am by The Invisible

» LFIN - LB Finance
Thu Nov 01, 2018 10:03 am by The Invisible

» PABC.N0000 (Pan Asia Banking Corporation PLC)
Thu Nov 01, 2018 9:56 am by The Invisible

» Sri Lanka jumps 11 places to 100th rank in World Bank’s Doing Business index
Thu Nov 01, 2018 9:52 am by The Invisible

» Banking Sector
Thu Nov 01, 2018 9:50 am by The Invisible

» All Share index crosses 6,000 points
Thu Nov 01, 2018 8:20 am by Brave Heart

» Asian Hotels and Properties September net down 48-pct
Thu Nov 01, 2018 8:17 am by Brave Heart

» Sri Lanka rupee weakens; stocks rally slows
Thu Nov 01, 2018 8:13 am by Brave Heart

» TJL.N0000 (Textured Jersey Lanka PLC.)
Wed Oct 31, 2018 7:27 pm by PANTOMATH

» Whats ailing Sri Lanka ? Why we are what we are!
Wed Oct 31, 2018 6:07 pm by Ethical Trader

» Sri Lankan rivals tempt defectors to swing crisis
Wed Oct 31, 2018 9:41 am by The Invisible

» Sri Lanka’s Piramal Glass in Sept quarter loss as costs rise
Wed Oct 31, 2018 9:36 am by The Invisible

» Sri Lanka President could dissolve parliament if interim budget is defeated: Wijedasa
Wed Oct 31, 2018 9:34 am by The Invisible

» Sri Lanka political crisis hikes debt rollover risk: Fitch
Wed Oct 31, 2018 9:31 am by The Invisible

» Sri Lankan political standoff could threaten reforms: S&P Ratings
Wed Oct 31, 2018 9:29 am by The Invisible

November 2018
SunMonTueWedThuFriSat
    123
45678910
11121314151617
18192021222324
252627282930 

Calendar Calendar

Disclaimer


Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker

Sri Lanka's Cargills Bank gets BB(lka) credit rating: Fitch

Go down

Sri Lanka's Cargills Bank gets BB(lka) credit rating: Fitch

Post by The Invisible on Fri Oct 19, 2018 7:48 am

ECONOMYNEXT - Fitch Ratings said it has assigned Sri Lanka's Cargills Bank a 'BB(lka)' credit rating with a stable outlook on its small and developing domestic franchise and higher than industry-average non-performing loans ratio.

"The rating captures its high risk appetite and pressures on its financial profile, particularly asset quality and funding and liquidity, due to the bank's aggressive growth aspirations in the medium term," Fitch Ratings said in a statement Thursday.

Corporate loans account for 42 percent of Cargills Bank's lending portfolio, and is expected to decline as the bank diversifies its lending into retail, agriculture and small and medium businesses, the ratings agency said.

"...gross non-performing loan ratio jumped to 3 percent at end-June 2018 from 1 percent at end-2016, due to two large corporate non-performing loans. The bank's non-performing loans ratio is likely to be higher than that of the industry in the short to medium term, as it expands rapidly into the more economically vulnerable segments

Fitch Ratings' statement in full:

Fitch has published Sri Lanka-based Cargills Bank Ltd's (CBL) National Long-Term Rating of 'BB(lka)' with a Stable Outlook.

-Key rating drivers-

CBL's rating reflects its small and developing domestic franchise, evolving business model and limited operating history in Sri Lanka's banking sector. The rating also captures its high risk appetite and pressures on its financial profile, particularly asset quality and funding and liquidity, due to the bank's aggressive growth aspirations in the medium term. CBL began its operations in July 2014, and had only an insignificant share of system assets at end-June 2018.

We expect the bank to remain focused on the retail, SME and agricultural segments (1H18: 58% of gross loans, 2017: 39%) as it diversifies away from the corporate sector. Corporate loans remain dominant, constituting about 42% of gross loans, but the proportion is likely to shrink in the medium term.

CBL's reported gross non-performing loan (NPL) ratio jumped to 3% at end-June 2018 from 1% at end-2016, due to two large corporate NPLs. The bank's NPL ratio is likely to be higher than that of the industry in the short to medium term, as it expands rapidly into the more economically vulnerable segments.

We foresee pressures on CBL's funding and liquidity as it pursues an aggressive growth plan in the medium term, as its deposit franchise is still developing and competition for deposits is high. To address this, we believe the bank may supplement its funding mix with wholesale funding and equity.

We expect CBL's pre-impairment profitability to improve further in the medium term, although higher credit costs from asset quality pressures and the implementation of SLFRS 9 could limit the gains. The bank's core profitability improved in 2017 but it remained weaker than peers'.

We expect CBL's capital ratios to decline from the current Tier 1 capital ratio of 34%, weighed down by rapid loan growth that exceeds internal capital generation. The regulator in October

2017 increased the minimum capital requirement for licensed commercial banks to LKR20 billion to be met by end-2020, which we believe CBL will require capital injections to meet as internal capital generation will be insufficient.

The Cargills Group, which owns supermarket chain Cargills Food City, has a 53% effective stake in CBL (voting rights restricted to 30% by the regulator), which gives the bank benefits of the strong "Cargills" brand and group synergies. Fitch has not factored in any extraordinary support in CBL's rating, although ordinary support has been incorporated.

-Rating sensitivities-

A rating upgrade could be triggered if CBL is able to build a sustainable business model through the execution of its medium-term strategy. A sustained improvement in its financial profile, particularly in profitability and funding, could also lead to a positive rating action.

Deterioration in loss-absorption buffers, either through aggressive loan expansion or greater share of un-provisioned NPLs, could place downward pressure on the rating. Failure to support growth through more diversified funding sources would be negative for the rating. (COLOMBO, 18 October 2018)
avatar
The Invisible

Posts : 686
Join date : 2016-11-28
Age : 39

Back to top Go down

Back to top


 
Permissions in this forum:
You cannot reply to topics in this forum