FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post



Poll

Can there be another Covid-19 wave in Sri Lanka?

Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch Vote_lcap68%Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch Vote_rcap 68% [ 178 ]
Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch Vote_lcap18%Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch Vote_rcap 18% [ 47 ]
Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch Vote_lcap13%Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch Vote_rcap 13% [ 35 ]

Total Votes : 260

STOCK MARKET TRAINING
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



Latest topics

» EXPO/BILL/LOLC
by Dilshan2020 Today at 12:01 pm

» Maharaja after long time
by Wickyz Today at 11:59 am

» SUNSHINE HOLDINGS PLC (SUN.N0000)
by Wickyz Today at 11:50 am

» Unprofesional unethical practice in CSE while reaching 10000
by rajini Today at 11:44 am

» LOLC gets balance $ 225 m from Cambodia PRASAC stake sale
by stockchaser Today at 10:45 am

» KELANI TYRES PLC (TYRE.N0000)
by Value Pick Today at 10:38 am

» NIFL is about to run towards ATH
by Jay-Jay Today at 9:54 am

» The fate of NIFL .. CLC .. LOFC under LOCH
by Jay-Jay Today at 9:50 am

» Lanka IOC draws investor interest at CSE
by samaritan Today at 9:36 am

» LOFC AND CLC Target Price??
by Rational Investor Today at 9:34 am

» BEST OFFERS FOR BANKING INSTRUMENTS
by Mohammed020 Today at 1:58 am

» Lubricant oil Prices increases for third time.. Keep eye on Industry
by rajithasahan Today at 12:17 am

» GLAS will be winner with Super Gain.
by Chithi Yesterday at 10:39 pm

» HAYLEYS PLC
by Basu Yesterday at 10:28 pm

» In the vicinity listing of LOCH – “LOLC CEYLON”
by Kethy Yesterday at 10:27 pm

» WATAWALA PLANTATION PLC (WATA.N0000)
by Niwa Yesterday at 8:52 pm

» Fertilizer issue over !! Buy plantations
by Emdmadusanka Yesterday at 8:33 pm

» JAT HOLDINGS PLC (JAT.N0000)
by SAGA Yesterday at 2:01 pm

» CLC - Bull & Bear LOCKED HORNS - can blast at any time.
by SAGA Yesterday at 12:32 pm

» කොළඹ කොටස් වලට ඉදිරියේ එන ප්‍රවනතා
by samaritan Yesterday at 12:30 pm

EXPERT CHRONICLE™

MARKET CHAT


CHRONICLE™ ANALYTICS


ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

LATEST TWEETS

You are not connected. Please login or register

FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch

Sri Lanka's HDFC Bank downgraded to 'BBB(lka)': Fitch

Go down  Message [Page 1 of 1]

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Nov 29, 2012 (LBO) - Fitch Ratings has downgraded Sri Lanka's HDFC Bank, a mortgage lender by one level to 'BBB(lka)' as its profits came under pressure from rising interest rates.

"The downgrade reflects the bank's inability to swiftly re-price its existing housing loan portfolio to avert deterioration in profits as market interest rates started to rise since end-2011," the rating agency said.

"This failure of timely re-pricing has further accentuated the interest rate risk inherent in HDFC's balance sheet due to maturity mismatches between its assets and liabilities."

BBB is still in the investment grade.

The bank's outstanding 195 million rupees of senior unsecured redeemable debentures have also been downgraded to 'BBB(lka)'. The outlook on both ratings is stable.

Fitch said with 51 percent state ownership support was expected if needed. Credit management was also satisfactory, with overdue loans only 1.8 percent of total advances.

The full statement is reproduced below:

Fitch Downgrades Sri Lanka's HDFC Bank to 'BBB(lka)'; Outlook Stable

Fitch Ratings-Colombo/Seoul/Singapore-29 November 2012: Fitch Ratings Lanka has downgraded the Housing Development Finance Corporation Bank of Sri Lanka's (HDFC) National Long-Term Rating to 'BBB(lka)' from 'BBB+(lka)'.

The Outlook is Stable. Its LKR195m outstanding senior unsecured redeemable debentures have also been downgraded to 'BBB(lka)' from 'BBB+(lka)'.
The downgrade reflects the bank's inability to swiftly re-price its existing housing loan portfolio to avert deterioration in profits as market interest rates started to rise since end-2011. This failure of timely re-pricing has further accentuated the interest rate risk inherent in HDFC's balance sheet due to maturity mismatches between its assets and liabilities.

The current rating and Stable Outlook reflect Fitch's expectations that the Government of Sri Lanka, with over 51% ownership of HDFC, is likely to provide support to the bank under extreme circumstances if required. This is based on the bank's linkages with the state, and its quasi-policy role in supporting the government's initiatives towards low- and middle-income housing.

The state's ownership stake in HDFC is almost entirely held via the National Housing Development Authority - a state-owned corporation that is tasked with formulating and implementing the national housing policy. HDFC's board is appointed by the Ministry of Finance, and seven out of a total of nine board members are senior public servants, representing key ministries and state-owned corporations, most of which are related to housing and construction. A majority of HDFC's clientele consists of low and middle-income consumers who have limited access to traditional bank credit.

HDFC's profitability weakened sharply in the nine months to September 2012 (9M12), driven by increasing borrowing costs in line with rising market interest rates. Consequently HDFC's return on assets (ROA) fell to an annualised 0.07% at end-9M12 (end-2011: 1.77%). The bank increased interest rates on its existing housing loans with effect from 1 October 2012 - by up to 200bps or up to a ceiling rate of 18% - which the bank expects will stem the deterioration in profits in the near-term.

HDFC successfully amended its Act of Incorporation in November 2011, in order to be able to disburse short-term lending products such as gold-backed loans, Islamic finance, and leasing. Furthermore the bank expects to introduce variable-rate housing loans starting in 2013 which will be re-priced annually in line with market rates. However, gaining a critical mass in these products is likely to take 24 months or more, and the successful implementation of these strategies will be key in determining the level of HDFC's long-term profitability.

HDFC's credit risk management has been satisfactory, considering the low income nature of its borrowers. Credit quality is supported by the low default risk of housing loans relative to other consumer loans. Loans in arrears of over 18 months have remained broadly below 1.8% of total advances between 2009 and 2012.

HDFC's rating may be downgraded further if its linkages with the state weakens, including a dilution of the state's majority ownership of the bank. Fitch does not expect rating upside for HDFC over the medium-term, given that a successful reduction in the bank's exposure to interest-rate risk will likely take longer to implement.

HDFC is a licensed specialised bank created by an Act of Parliament. At end-September 2012 HDFC's asset base stood at LKR20.4bn, while it had a network of 21 branches and 11 service centers.

http://lbo.lk/fullstory.php?nid=1144943595

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum