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| Wednesday, 10 November 2004 |
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A (sri) rating for HDFC Bank's Unsecured Redeemable Debentures - 2004/2008 Fitch Ratings Lanka Ltd (FRL) has assigned a A (sri) national rating for the proposed issue of Rs 500 million of 2004/2008 Unsecured Redeemable Debentures of HDFC Bank of Sri Lanka (HDFC). A(sri) long-term rating denotes a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. The funds raised will be used to help fund the growth in the loan book. During the first nine months of 2004, HDFC's financial performance has been in line with the 2003 performance. The net interest margin has been maintained at a healthy 7.3%, however due to a higher tax charge, ROA has declined to 2.8% from 3.7% on 2003. Asset quality has improved with NPL's decreasing by 18% in absolute terms. Hence Gross NPL ratio in September 2004 has improved from 11.1% to 7.4%, while Net NPL/Equity improved to 43%. (59% as at Dec 2003). HDFC is a licensed specialised bank providing housing finance. The majority of its portfolio comprises loans to the low income segment of the market, which makes up a large proportion of the housing demand. Currently the Government through the National Housing Development Authority (NHDA) and Employees Trust Fund (ETF) owns approx 90% of HDFC. |
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