ICRA Lanka Limited has upgraded the Issuer Rating of Vallibel Finance PLC (VFP or the Company) to [SL]BBB+ (pronounced SL triple B plus) with Stable outlook from [SL]BBB (pronounced SL triple B) with Stable outlook.
The rating upgrade considers the improvement in the Company’s capital profile with the Tier 1 and Total CAR at 12.98% and 14.09% in Mar-21 vis-à-vis 11.93% and 13.04% in March-20; same is above the regulatory limits of 6.50% and 10.50%. Also, the Company’s gearing improved to 5.52 times as of January 21, compared with 6.58 times in March-20, aided by its healthy internal generation. The rating factors in the financial and managerial support expected from the Vallibel group of companies, VFP’s experienced senior management team and its adequate internal controls.
The rating also takes note of VFP’s healthy profitability indicators with RoE and RoA of 23.57% and 3.24%, respectively, in FY2021 which further improved to 27.41% and 4.04% in Q1 FY2022.
The rating also factors in VFP’s favourable asset quality indicators with its Gross NPA and Net NPA ratios at 4.48% and 1.23%, respectively, in March-21, which remain below sector average of 11.32% and 2.81%, respectively. In Q1 FY2022, the GNPA and Net NPA ratios rose to 5.47% and 1.89%, respectively, due to the effects of the third Covid wave in the country and the lockdown restrictions.
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