Softlogic Finance assigned BB-/P3

RAM Ratings Lanka has assigned long-and short-term financial institution ratings of BBB-and P3 to Softlogic Finance PLC (SLF) or the Company); the outlook on the long-term rating is stable. The ratings are premised upon the improvement in its market position while maintaining its asset quality at a level that commensurate with the BBB-rating category.

The ratings are also upheld by adequate asset quality, performance, capitalisation and liquidity while being tempered by moderate funding and aggressive loan growth.

Formerly known as Capital Reach Leasing Ltd, SLF is a registered finance company (RFC) and comes under the purview of the Central Bank of Sri Lanka (CBSL). In August 2010, Softlogic Holdings PLC (SLH or the Group) acquired 53.84 percent of Softlogic Capital PLC (SLC) formerly known as Capital Reach Holdings Ltd (CRHL); SLC in turn has a direct stake of 62.17 percent in SLF. Since then, SLH has provided financial support in terms of capital infusions.

SLF leverages on the Group's well-known franchise to garner deposits; this is reflected in the aggressive growth in deposits and better renewal rates. Meanwhile, SLF has been able to increase its market share (in terms of assets) in the RFC industry to 1.88% as at end-March 2011 from 1.01 percent in the previous year.