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Sri Lanka’s Citizens Development debenture to raise Rs2bn

ECONOMYNEXT – Sri Lanka’s Citizens Development Business Finance PLC (CDB) will raise up to 2 billion rupees via a debenture issue, the Colombo Stock Exchange said.

The exchange on Friday said it approved CDB’s debenture issue for which subscriptions will open on 20 March.

CDB is offering 10 million subordinated, unsecured, listed, redeemable, rated debentures at 100 rupees each, and will exercise an option to double the offering if oversubscribed, the stock exchange announced.

The finance company is rated BBB+ by ICRA Lanka, a ratings agency that’s part of the Moody’s Investors Service group.

Capital Alliance Partners is joint managers of the issue.

CDB was trading at 72 rupees a share Friday.

The company reported earnings per share of 15.29 rupees for the nine months to end December 2018 on profits of 830.4 million rupees, up 34 percent from a year earlier.

Interest income grew 31 percent, slower than interest expenses growth at 40 percent leading to a net interest income of 2.5 billion rupees, up 15 percent from a year earlier.

Fee incomes nearly doubled in this period to 292.9 million rupees.

Bad debt provisions fell 10 percent to 154.5 million rupees.





The finance company’s loan book expanded 26 percent to 54.5 billion end December 2017. Deposits grew 34.6 percent to 43.9 billion rupees.

The quality of CDB’s loan book is better than systemic level, ICRA Lanka said in a November 2017 credit rating review, with non-performing loans at 3.2 percent.

Short term fixed deposits account for 70 percent of CDB’s funding profile, the ratings agency said, with debentures and bank borrowings making up the rest.

"However, a good deposit renewal rate of about 75% and the long standing relationships with banks and other financial institutions provide comfort on CDB’s overall liquidity profile," ICRA Lanka said.

CDB credit costs are declining on stable asset quality and stable expenses. Margins will moderate as the finance company shifts to low risk lending.

"CDB’s ability to manage operating and credit expenses will be key drivers of profitability, with limited scope for expanding lending yields," ICRA Lanka said. (COLOMBO, February 09, 2018)

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