ICRA Lanka, a subsidiary of ICRA Limited, has assigned the issuer rating of [SL]BBB- with stable outlook to Vallibel Finance.
The rating takes note of the expected financial and managerial support from the Vallibel group of companies, its experienced senior management team along with adequate internal controls and monitoring processes, which helped the company to maintain a reasonable asset quality profile (gross NPA at 4.3% as in Dec-15) and its good profitability indicators (RoA1 at 2.8% and RoNW2 at 32.5%in 9MFY2016) notwithstanding the moderation witnessed over the recent past.
The rating however takes note of the highly competitive business environment in VFP's target product segment (Cars/vans), exposure to customers with moderate credit profile, its high gearing level ( 10.0 times in Dec-15) and high dependence on deposits.
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