Vallibel Finance achieves (BB+) RAM rating

Sri Lanka's Vallibel Finance Ltd has been rated ‘BB+’ with a stable outlook by RAM Ratings Lanka.

RAM Ratinsg Lanka stated that Vallibel’s ratings were moderated by an increasing trend in new non-performing loans (NPLs) in the recent times, comprised with an unweathered loan portfolio, showing a belligerent growth in loans. The ratings are however, sustained by the Company’s average asset quality, performance and capitalization levels. The company’s gross NPL ratio had decreased from 4.26 percent by the end of March 2010 to 1.81 percent by the end of March 2012. , But, the level depreciated to 2.67 percent by the first half of the current financial year.

Sri Lanka ran into a balance of payments crisis from mid 2011 due to excessive credit taken by state enterprises which were accommodated with central bank credit.

In addition to rising interest rates, the currency also weakened, pushing inflation up and real incomes of people down.

Overall, Vallibel’s performance is deemed average; its profitability indicators were relatively stable and in line with similar-rated peers’.

The Company's net interest margin (“NIM”) clocked in at 10.85% in FY Mar 2012 (FY Mar 2011:11.46%), although narrowing to 9.26% in 1H FY Mar 2013 as deposits re-priced upward faster in a rising interest-rate environment.