Fitch affirms The Finance at 'BBB(lka)'

Fitch Ratings has affirmed Sri Lanka's The Finance Company PLC's (TFC) 'BBB(lka)' National Long-term rating, and the 'BBB-(lka)' (BBB minus(lka)) rating of its subordinated debentures.

The outlook has been revised to negative from stable.

TFC's rating factors in its significant market share and deposit franchise in the registered finance company (RFC) sector, whilst constrained by its low capitalisation, moderate profitability, and risks inherent to the real estate market.

The revision of the outlook to negative reflects the company's deteriorating profitability on account of rising funding costs and the lack of a commensurate increase in real-estate related income. Fitch will continue to monitor the company's efforts toward improving yields, enhancing recoveries and generating greater liquidity from its real-estate assets, particularly in a challenging economic environment.