ICRA Lanka Limited has reaffirmed the issuer rating of UB Finance Company Limited at [SL]BB. The outlook on the rating is revised to Stable from Negative.
The revision in the outlook factors in the significant improvement in UBF’s capitalization profile following the recently completed rights issue. The company reported a net worth of Rs 2,748 million in October-21 as compared to the regulatory minimum requirement of Rs 2,000 million. UBF’s capital profile deteriorated significantly in 2018 because of weak profitability and adjustments required as per the revised regulatory capital computation norms and very specifically due to the one-time IFRS-9 transition adjustment of Rs 430 million in FY2019.
As a result, the Central Bank of Sri Lanka placed a lending cap of Rs 9.8 billion and deposit cap of Rs 7.2 billion on the Company, which was revised to Rs 8.1 billion and Rs 5.8 billion respectively in August-20.
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