Financial Times

Report card on Senkadagala
LRA assigns A3/L2 rating to Senkadagala Finance Company
Malaysian-backed Lanka Rating Agency Ltd (LRA) has assigned a long-term financial institution rating of A3 (with a stable outlook) and a short-term rating of L2 to Senkadagala Finance Company Ltd.

The ratings reflect Senkadagala’s commendable asset quality, above-average profitability, satisfactory liquidity and sturdy capitalization, LRA said in a statement.

Senkadagala is LRA’s first rating to be published – since it entered the ratings’ industry a year ago -- as well as the first dual rated company in Sri Lanka.
So far 15 finance companies have signed up LRA which has completed 12 assignments. “We have another leasing company and a merchant bank that have signed the agreement for rating,” an LRA official said.

Senkadagala is a licensed finance company registered under the Finance Companies Act No. 78 of 1988 and incorporated in Kandy. It is also registered under the Finance Leasing Act No. 56 of 2000, to carry out its leasing business.

The company headed by Lakshman Balasuriya, the Chief Executive Officer, is supported by an able team of senior managers whose competency is reflected in the company’s sound performance.

LRA said Senkadagala had been the first finance company in Sri Lanka to obtain a domestic credit rating. It also won the “Best Annual Report” award for registered finance companies in 2004, conducted under the aegis of the Institute of Chartered Accountants of Sri Lanka.

Sound lending practices and effective portfolio management have propelled Senkadagala’s asset quality to the forefront of the domestic finance-company industry. “Senkadagala’s powerful information technology (IT) system provides real-time information, enabling the management to have greater control over its portfolio. As a result, this portfolio has been managed within acceptable credit parameters, resulting in better collections and less overdues. Senkadagala writes off loans that have been in arrears for more than 6 months.”

LRA said the company’s performance has been consistently better than the industry’s, mainly due to its well-managed interest margins and the cost efficiencies gained through its automated lending system, on top of staff productivity and careful branch expansion.

LRA is a 100%-owned subsidiary of RAM, Malaysia’s premier rating agency. RAM is also an affiliate of Standard & Poor’s, the world’s largest rating agency.

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