Commercial Leasing and Finance PLC

ICRA Lanka assigns [SL]A+(SO) rating the asset backed trust certificates of Commercial Leasing & Finance PLC

Instrument*Rated Amount   (LKR Mn)Outstanding Amount  (LKR Mn)Rating Action
Asset Backed Trust Certificates3,0003,000[SL]A+ (SO) (Stable); Assigned
Issuer RatingN/AN/A[SL]A (Stable); Outstanding
Listed, Senior, Unsecured, Redeemable Debenture programme5,0005,000[SL]A (Stable); Outstanding

Rating action

ICRA Lanka Limited has assigned [SL]A+(SO) (pronounced SL A plus Structured Obligation) rating with Stable outlook to the LKR 3,000 Mn asset backed trust certificates of Commercial Leasing & Finance PLC (CLC or the Company). The letters SO in parenthesis suffixed to a rating symbol stand for Structured Obligation. The (SO) rating is specific to the rated issue, its terms, and its structure. The SO rating does not represent ICRA Lanka’s opinion on the general credit quality of the issuer concerned.  

Structure of the proposed asset backed trust certificate program

Issue Details:

The key issue details are summarised in the table below.

Nature of InstrumentTrust Certificates issued by Commercial Leasing & Finance PLC
Company / OriginatorCommercial Leasing & Finance PLC
IssuerCommercial Leasing & Finance PLC – Trust 01
TrusteeNSB Fund Management Company Limited (NSBFMC)
TenorUp to 36 months
SecurityVehicle Loan Receivables
StructureNSBFM would be the Trustee.

Analytical approach: For arriving at the ratings, ICRA has applied its rating methodologies as indicated below.

Links to applicable criteria:  ICRA Lanka’s Credit Rating Methodology for Non-Banking Financial Institutions

About CLC:

CLC was incorporated in the year 1988 as a Specialised Leasing Company. The LOLC Group acquired a controlling stake initially and then 100% of the Company in 2008. The main product lines of CLC include leasing and loans for vehicles and equipment, and factoring. CLC obtained the license to operate as a LFC in December 2011. Subsequently, CLC has also started offering savings and deposit products. CLC primarily operates with borrowers in the retail and MSME[1] segments. CLC was relisted on the Colombo Stock Exchange (CSE) on June 05, 2012 to comply with the requirements of the Central Bank of Sri Lanka (CBSL. LOLC group currently has an effective equity stake of 99%. In November 2015, CLC acquired a 94.35% stake in LOLC Development Finance PLC which was diluted to 44% after LDFP’s rights issue programme in May 2017.

During the year ended March 31, 2020, CLC reported a net profit of LKR 1,547 Mn on a total asset base of LKR 69.6 Bn as compared to a net profit of LKR 1,198 Mn on a total asset base of LKR 70.8 Bn in the previous financial year. The Company reported a net profit of LKR 1,922 Mn on a total asset base of LKR 72.2 Bn for 9MFY2021.

Key financial indicators-CLC
In LKR MnFY2019FY20209MFY2021 (Unaudited)
Net Interest Income74296,6325,741
Profit after Tax1,1981,5471,922
Net worth (adjusted for revaluation reserves)17,45918,92521,006
Loans and Advances53,49354,13955,519
Total Assets70,85669,63172,273
Return on Equity7.05%8.50%12.84%
Return on Assets2.83%2.84%4.41%
Gross NPA4.90%7.05%7.66%
Capital Adequacy Ratio (Tier 1)20.51%21.79%20.95%
Gearing (times, adjusted for revaluation reserves)2.992.612.23
Rating history for last three years:

[1] MSME- micro, small and medium enterprises

Analysts
Rasanga Weliwatta
+94-773553564
rasanga@icralanka.com  

Sahil Udani
+91-22-61143429
Sahil.udani@icraindia.com


Disclaimer
ICRA Logo

Subsidiary of ICRA Limited

A Group Company of Moody's Investors Service

CORPORATE OFFICE
Level10, East Tower, World Trade Center, Colombo 01, Sri Lanka
Tel:+94 11 4339907;Fax:+94112333307 Email:info@icralanka.com; Website:www.icralanka.com

© Copyright, 2021 ICRA Lanka Limited. All Rights Reserved. Contents may be used freely with due acknowledgement to ICRA Lanka.

ICRA Lanka ratings should not be treated as recommendations to buy, sell or hold the rated debt instruments. ICRA Lanka ratings are subject to a process of surveillance, which may lead to revision in ratings. An ICRA Lanka rating is a symbolic indicator of ICRA Lanka’s current opinion on the relative capability of the issuer concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website www.icralanka.com or contact ICRA Lanka’s office for the latest information on the outstanding ICRA Lanka ratings.

All information contained herein has been obtained by ICRA Lanka from sources believed by it to be accurate and reliable, including the rated issuer. ICRA Lanka however has not conducted any audit of the rated issuer or of the information provided by it. While reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and ICRA Lanka in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information.

ICRA Lanka does not take any responsibility for accuracy of material/documents prepared or published by other parties based on this document. All ICRA Lanka official rating rationales are prepared in English and external parties may present or publish translated versions of the same. Readers are henceforth advised to refer to the ICRA Lanka’s official rating rationale in the event of any inconsistency found in such documents.

ICRA Lanka or any of its group companies may have provided services other than rating to the issuer rated. All information contained herein must be construed solely as statements of opinion, and ICRA Lanka shall not be liable for any losses incurred by users from any use of this publication or its contents.