Fitch affirms LOLC rating

RATING: Fitch Ratings Lanka has affirmed the ‘A(lka)’ National Long-term rating of Lanka Orix Leasing Company Limited (“LOLC”).

The outlook on the rating is stable. LOLC’s rating reflects its strong financial profile, and its established market position as the oldest specialised leasing company (“SLC”) in Sri Lanka, which in recent years has diversified into offering other financial services.

Fitch also takes comfort in the 30% stake held by ORIX Corporation of Japan (“ORIX”) - a stake it has maintained since LOLC’s inception - and the benefits arising as a result.

However, LOLC’s rating is constrained by the inherent lack of product diversity compared to commercial banks, its relative size, as well as its nascent customer deposit mobilising franchise.

LOLC’s loan book grew at a high annualised average rate of 40.6% in FY06 and the six months to end-September 2006 (“H107”), largely on account of a surge in funding during the period.