RAM upgrades LBF's rating

RAM Ratings Lanka has upgraded LB Finance PLC's (LBF) long-term financial institution rating, from BBB- to BBB, with a stable outlook; the short-term rating has been reaffirmed at P3. The rating upgrade reflects LBF's healthier asset quality, its strong financial performance and healthier capitalization levels. Concurrently, RAM Ratings Lanka has also upgraded the respective long-and short-term ratings of LBF's Rs. 450 million unsecured subordinated redeemable debentures, from a respective BB+ and NP to BBB- and P3.

The 1-notch difference between the rating of LB Finance's Rs. 450 million subordinated bonds and its long-term financial institution rating mirrors the subordinated nature of the former to the Company's senior unsecured obligations.

LBF is the third-largest registered finance company (RFC) in Sri Lanka, accounting for nearly 8.60 percent of the industry's assets as at end-March, 2009.

The Company demonstrated strong resilience in challenging economic conditions to augment its loan portfolio by 30.67 percent year on year (y-o-y) during FYE March 31, 2009.

The expansion was achieved through LBF's network of 21 branches and 57 pawning centres, with emphasis being placed on high-growth segments. Simultaneously, the Company also focused on improving its asset quality by strengthening its monitoring and recovery processes.