ICRA Lanka Limited, subsidiary of ICRA Limited, a group company of Moody’s Investors Service, has reaffirmed the issuer rating of [SL]A- (pronounced SL A minus) for Capital Alliance Limited (CAL). The outlook on the rating has been revised to Stable from Negative.
The revision in outlook factors in the healthy performance of CAL, with company earning a net profit of Rs 795 million in 9M FY2020, in comparison to Rs 37 million in FY2019 (Rs 573 million in FY2018). The improvement in profitability supported its capital profile with company’s net worth increasing to Rs 2.2 billion in December 2019, above the regulatory threshold of Rs 1 bn. The higher net worth is expected to provide a buffer/cushion against adverse interest rate movements. The Tier 1 capital adequacy ratio (CAR) was healthy at 15.57% in December 2019, reduced from 17.81% in March 2019 (22.45% in June 2018), due to an increase in portfolio duration (to 4.17 years from 3.59 years) and portfolio growth during the period.
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