Stocks & Companies

Sri Lanka’s Fintrex Finance retains ‘BB(lka)’ Fitch rating

Wednesday August 6, 2025 12:41 pm

ECONOMYNEXT – Fitch Ratings has reaffirmed the National Long-Term Rating of Sri Lanka’s Fintrex Finance at ‘BB(lka)’ with a stable outlook. The rating agency also maintained the ‘B+(lka)’ rating on the company’s subordinated debentures.

Fintrex’s rating reflects its “expansion into riskier mobile financing, higher leverage and more volatile earnings” Fitch said.

“These weaknesses are balanced by acceptable asset quality and improved funding diversity.”

Fintrex’s business profile remains constrained by higher concentration risks relative to peers, Fitch said, reflecting its more limited franchise as one of Sri Lanka’s smaller finance and leasing companies.

The full statement is reproduced below:

Fitch Affirms Fintrex Finance at ‘BB(lka)’; Outlook Stable

Fitch Ratings – Singapore/Colombo – 05 Aug 2025: Fitch Ratings has affirmed Sri Lanka-based Fintrex Finance PLC’s National Long-Term Rating at ‘BB(lka)’ with a Stable Outlook. Fitch has also affirmed the ‘B+(lka)’ National Long-Term Rating on the company’s subordinated debentures.

Key Rating Drivers

Standalone Profile Underpins Rating: Fintrex’s rating reflects its smaller balance sheet compared with higher-rated peers, in addition to its greater growth appetite, expansion into riskier mobile financing, higher leverage and more volatile earnings. These weaknesses are balanced by acceptable asset quality and improved funding diversity.

More Conducive Operating Environment: We project Sri Lanka’s GDP growth at 4.3% in 2025 and 3.6% in 2026, supported by low inflation and accommodative monetary conditions on renewed economic activity. This follows real GDP growth of 4.8% yoy in 1Q25 and a 5.0% expansion in 2024, driven by the industry and service sectors, including a rebound in tourism after years of contraction and instability. That said, external headwinds from global tariff revisions and ensuing economic slowdown could challenge Sri Lanka’s economic recovery and affect the pace of growth.

Modest Franchise, Aggressive Growth: Fintrex’s business profile remains constrained by higher concentration risks relative to peers, reflecting its more limited franchise as one of Sri Lanka’s smaller finance and leasing companies. Its market share remains modest, at 1.2% of sector loans in the financial year ending March 2025 (FY25). This was despite a meaningful rise from 0.8% in FY23, with a CAGR of 40% over FY23-FY25 outpacing the sector’s 15%. Yet, recent high growth could introduce asset quality risks as the loans season.

New Lending Products: Fintrex has diversified its product suite over the past two years, mainly by introducing high-yielding mobile financing and gold lending. This expansion could test its risk management and underwriting capabilities – particularly in mobile financing, where credit risk may be higher due to lower recovery prospects. However, we expect four-wheeler financing to remain the core of Fintrex’s portfolio in the near term, supported by the company’s targeted product mix and the recent lifting of a longstanding vehicle import ban.

Acceptable Asset Quality: The company’s increasing exposure to riskier mobile financing may lead to a mild rise in delinquencies, but we expect its stage 3 loan ratio to remain below 10% over the next two years, provided economic conditions remain supportive. We believe Fintrex is more sensitive to economic shocks, given its higher borrower concentration relative to larger, higher-rated peers. Fintrex’s stage 3 loan ratio improved to 8.6% in FY25, from 11.2% in FY24. This was broadly in line with the sector average of 8.3% (FYE24: 14.7%).

Interest Margin to Improve: We anticipate upside to the company’s net interest margin, on an increased share of higher-yielding products and more favourable funding costs. Pre-tax profit remained stable in FY25, at 2.8% of average assets (FY24: 2.8%), as an improved net interest margin was offset by normalised credit costs following net recoveries in FY24.

Growth Weakens Capitalisation: We expect Fintrex’s capitalisation to weaken further in the near term, as continued rapid asset growth is likely to outpace internal capital generation. The tier-1 capital ratio declined to 13.5% in FY25, from 16.1% in FY24, while the total capital ratio increased to 18.3% (FYE24: 16.1%), backed by the issuance of a LKR1 billion subordinated debenture in March 2025. Fintrex’s rating also factors in the company’s commitment to maintaining a capital buffer of 2pp above the regulatory minimum tier-1 and total capital ratios of 8.5% and 12.5%, respectively.

Modest Funding: Fintrex’s funding base has gradually improved through an expanded customer deposit base and the recent subordinated bond issuance. However, its funding franchise and flexibility – as reflected by its cost of funds and share of unsecured funding – remain weaker than those of larger peers. Deposit funding, the primary source of unsecured funding for finance and leasing companies, accounted for 56% of Fintrex’s total funding in FY25 (FYE24: 56%), well below the sector average of 76%.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

The rating is sensitive to a change in Fintrex’s credit profile relative to that of other Sri Lankan issuers. Negative rating action could be triggered by a large deterioration in asset quality relative to peers, without an improvement in capital or provisioning buffer. Aggressive growth without maintaining an adequate capital buffer as planned or signs of earnings or liquidity pressure could also lead to negative rating action.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

The rating is sensitive to a change in Fintrex’s credit profile relative to that of other Sri Lankan issuers. The rating may be upgraded if the company significantly reduces its customer concentration, perhaps due to a broader or more diversified franchise, while maintaining comparable asset quality with peers. This is provided the company maintains a balanced funding and liquidity profile, with leverage that is not excessive relative to peers with an acceptable regulatory capital buffer.

DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS

Fintrex’s Sri Lankan rupee subordinated debentures are rated two notches below its National Long-Term Rating. This reflects our baseline notching for loss severity for this debt class and expectation of poor recoveries in the event of default. We apply the Bank Rating Criteria in rating these instruments, as we view the prudential capital framework for finance companies to be closer to that for banks in Sri Lanka. There is no additional notching for non-performance risk, as the debentures do not contain going-concern loss-absorption or coupon-deferral features.

DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES

Any change in Fintrex’s National Long-Term Rating would lead to corresponding action on its subordinated debt rating.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria. (Colombo/Aug5/2025)

Health

Sri Lanka to fix prices for 90-pct of imported medicines within a year: NMRA

Thursday October 1, 2026 12:24 pm

ECONOMYNEXT — Sri Lanka’s National Medicines Regulatory Authority (NMRA) expects to enforce maximum retail prices (MRPs) for roughly 90 percent of imported medicines over the coming year, NMRA chairman Ananda Wijewickrama said.

The regulator is carrying out brand-specific price determinations across more than 6,000 registered formulations as pharmaceutical companies submit applications for their annual import permits.

“These 6,000 medicines exist under various brand names. For example, if we take the medicine called Metformin, I think it is registered under more than 30 brand names. We determine prices for all 30 of these separately,” Wijewickrama said.

The price-setting mechanism would encompass the majority of active imports within a 12-month period, he said.

While certain registered medicines imported only for sporadic state tenders may fall outside this cycle, active commercial imports will be capped.

Pricing determinations will remain an ongoing process to adjust for raw material costs and exchange rate shifts.

To prevent inflated transfer pricing, import costs (Cost, Insurance, and Freight – CIF) are benchmarked directly against domestic retail rates in the manufacturing nations, such as India or Bangladesh.

All approved maximum retail prices will be published on the NMRA website for consumer reference, NMRA officials told reporters.

Standardizing MRPs will eliminate regional disparities where retail pharmacies in areas like Jaffna, Anuradhapura, and Colombo sell identical products at differing prices, Wijewickrama claimed.

While setting MRPs or price caps on medicines is intended to protect patients from price gouging, and lower healthcare costs, critics point out that international pharmaceutical companies would opt to withdraw products from a country, especially a small market like Sri Lanka, rather than sell at a loss.

This would take away a patient’s access to possibly higher-quality meds and leave them with generic meds. (Colombo/Oct01/2026)

Construction and Real Estate

Sri Lanka construction activity PMI eases in August amid bitumen shortage

Thursday October 1, 2026 11:55 am

ECONOMYNEXT – Sri Lanka’s construction sector activity expanded at a slower rate in August 2026 due to an ongoing bitumen shortage, with a Purchasing Managers Index compiled by the central bank registering a value of 59.4 compared to 61.4 in July.

“Many survey respondents highlighted the ongoing bitumen shortage, which continued to constrain road construction progress, limiting the overall growth momentum of the construction industry,” the central bank said.

The New Orders Index expanded, registering 62.5 in August from 57.1 in July, “mainly driven by the government-funded projects” the central bank said.

The Quantity of Purchases Index rose at a slower rate, registering 59.4 from 64.7 in July.

The Employment Index registered 59.7, from July’s 61.8, “although many firms continued to report skilled labour shortages.”

“Many survey respondents continued to highlight persistent shortages of skilled labour and raw materials as key constraints to sectoral growth.”

The Suppliers’ Delivery Time remained high in August, reflecting prevailing workloads among suppliers, registering an index value of 59.4 from 60.0 in July.

Bitumen shortages and fluctuations in material prices continued to pose challenges, CBSL said. (Colombo/Oct1/2026)

Markets

Sri Lanka stocks open up, ASPI gains 0.43-pct

Thursday October 1, 2026 10:26 am

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange was trending up in the first hour of trading on Thursday, CSE data showed, with the benchmark All Share Price Index moving up 0.43 percent.

The ASPI was up 90.01 points at 20,902.94, while the more liquid S&P SL20 was up 0.37 percent, or 21.52 points, at 5,915.68.

Positive contributors to the ASPI were Dialog Axiata (up 1.77 percent at 46.00 rupees), Distilleries Company of Sri Lanka (up 1.14 percent at 53.40 rupees), Citizens Development Business Finance (up 0.92 percent at 32.80 rupees), Commercial Bank of Ceylon (up 0.37 percent at 203.25 rupees), and Carson Cumberbatch (up 1.39 percent at 730.00 rupees).

Hemas Holdings (down 0.97 percent at 30.70 rupees), Renuka Holdings (down 2.51 percent at 38.90 rupees), and WealthTrust Securities (down 1.79 percent at 11.00 rupees) were top negative contributors.

Market turnover was 118.86 million rupees. Capital goods led turnover with 42.49 million rupees.

First Capital Treasuries PLC said that Ramesh Schaffter resigned as a Non-Independent Non-Executive Director with effect from October 1, to facilitate the restructuring of the company’s board. (Colombo/Oct01/2026)

Bonds & Forex

Sri Lanka rupee at 330.65/80 to US dollar spot, bond yields drop

Thursday October 1, 2026 9:50 am

ECONOMYNEXT – Sri Lanka’s rupee was quoted flat at 330.65/80 to the US dollar in the spot market on Thursday, while bond yields dropped, dealers said.

A bond maturing on 01.08.2030 was quoted at 11.05/15 percent, down from 11.10/20 percent.

A bond maturing on 15.10.2030 was quoted at 11.10/20 percent, down from 11.20/25 percent.

A bond maturing on 01.02.2031 was quoted at 11.20/25 percent, down from 11.25/30 percent.

A bond maturing on 15.12.2032 was quoted at 11.65/70 percent, down from 11.65/75 percent.

A bond maturing on 15.01.2033 was quoted at 11.70/75 percent, down from 11.70/80 percent.

A bond maturing on 15.10.2034 was quoted flat at 11.95/12.00 percent.

The telegraphic transfer rate for the dollar was 326.10 buying, 335.10 selling; the euro was 366.7316 buying, 380.5124 selling; pound was 431.1860 buying, 445.2944 selling.

On the Colombo Stock Exchange the All Share Price Index was up 0.46 percent, or 95.31 points, at 20,908; while the S&P SL20 was up 0.41 percent, 24.02 points, at 5,918. (Colombo/Oct1/2026)

Economy

Sri Lanka inflation breaches CB’s upper limit for third month in Sept; remains at 37-mo high

Wednesday September 30, 2026 9:20 pm

ECONOMYNEXT – Sri Lanka’s overall rate of inflation, as measured by the Colombo Consumer Price Index (CCPI), rose to more than three-year high of 8.0 percent in September 2026, steady from previous month, breaching the Central Bank’s upper inflation target rate of 7 percent for the third month, data from the state statistics office showed.

The CCPI for all items in September 2026 stood at 209.1, recording an increase of 0.3 index points or 0.1 percent compared to 208.8 in August 2026.

“This represents an increase in expenditure value of Rs.358.48 in the market basket,” the Department of Census and Statistics said in a statement.

The island nation’s economy witnessed upward price adjustments after the government raised fuel prices by nearly 50 percent following a supply shortage due to Middle East escalation, amid higher global oil prices.

Year-on-year food inflation accelerated to 8.7 percent in September 2026, its highest since May 2023 and rising from 8.5 percent in August 2026, contributing mainly to the increase in headline inflation.

Non-food inflation, year on year, rose to 7.7 percent in September 2026, steady as in the previous month.

Core inflation, year on year, accelerated to 5.4 in September 2026 from 5.1% in the previous month.

The Central Bank kept its Overnight Policy Rate steady in its latest monetary policy meeting on Wednesday and said inflation expected be higher single digit through the first quarter of 2027 and ease to 5 percent thereafter. (Colombo/September 30/2026)

Corruption

Sri Lanka regulator cracks down on illegal plantation deposit schemes

Wednesday September 30, 2026 7:31 pm

ECONOMYNEXT – The Central Bank of Sri Lanka has initiated legal enforcement and frozen bank accounts of six institutions accepting unauthorized deposits under the guise of plantation and forestry cultivation projects, Governor Nandalal Weerasinghe said.

Under Sri Lankan law, it is illegal for institutions not registered with the central bank to accept monetary deposits. The regulatory action comes as depositors hold media briefings complaining that companies have stopped returning their funds, even as these entities step up social media publicity to lure new investors into pyramid schemes.

“To pay an annual return of around 40% and return the entire capital, such a business cannot function without continuously collecting money from someone else. That makes it a pyramid scheme,” Weerasinghe said.

Weerasinghe compared the operations to past collapsed financial schemes like Golden Key and Sakvithi, noting that the only difference is that funds were solicited under the pretext of farming. Once central bank warnings and public awareness caused new deposits to slow down, the companies could no longer maintain repayments, causing the crisis to escalate.

The Governor rejected claims that regulatory action prevented companies from paying returns, emphasizing that the central bank had placed no restrictions on legitimate farming and had only frozen a small fraction of the total illegal deposits.

“We have placed no ban on farming. If they claim they cannot pay because of Central Bank actions, that admission itself proves the returns were never generated through agriculture,” Weerasinghe said.

Weerasinghe revealed that depositors’ funds were not used solely for cultivation, but were diverted into launching supermarkets, newspapers, tourism ventures, and paying artists and social media commentators. Suppliers to these auxiliary businesses were also left unpaid, with sales proceeds diverted back into the scheme to service pyramid payouts.

The Governor explained that the central bank’s key goals are halting fraudulent operations and preserving assets to minimize losses for eventual court-supervised distribution. He urged depositors to assist authorities with evidence rather than defending the companies, warning that late entrants historically lose everything.

Weerasinghe confirmed that further investigations are underway beyond the initial six institutions as fresh complaints arrive. He appealed to media houses not to promote these schemes and urged operators to halt operations and submit to the courts before they collapse entirely. (Colombo/September 30/2026)