ICRA Lanka Limited has reaffirmed the Issuer rating of Orient Finance PLC (OFP or the Company) at [SL] BB (pronounced SL double B). The outlook on the rating was revised to Stable from Negative.
The revision in the outlook factors in the improvement in OFP’s asset quality and profitability indicators in FY2021. OFP’s gross NPA ratio reduced to 10.18% in March 2021 vis-à-vis 18.78% in March 2020, mainly due to a NPA write-off of Rs. 1,422 million.
ICRA Lanka also takes note of the improved slippages ratio which stood at 1.79% in March 2021, compared to 9.43% in March 2020, which also contributed to the reduction in the GNPA ratio.
The rating factors in the net profit of LKR 193 million in FY2021 vis-à-vis the net loss of Rs. 437 million in FY2020, mainly on account of lower credit costs; credit provisioning/ATA had reduced to 1.29% during FY2021 vis-à-vis 6.15% in FY2020.
The rating continues to take comfort from the support derived from the parent Company, Janashakthi PLC (JPLC, rated [SL] BBB-/Negative by ICRA Lanka). JPLC had infused over LKR 1 Bn to OFP by way of a rights issue and conversion of preference shares in FY2020. With the capital support from JPLC and incremental internal generation, OFP’s Tier 1 and Total capital ratios stood at 9.71% and 11.13%, respectively in March 2021; same is above the regulatory limits of 6.50% and 10.50%.
0 comments: