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Fitch affirms sri lankas central finance at a+(lka)


(The following statement was released by the rating agency) COLOMBO, September 16 (Fitch) Fitch Ratings Lanka has affirmed Central Finance Company Plc's (CF) National Long-Term Rating at 'A+(lka)' with a Stable Outlook. Fitch has also affirmed CF's senior secured and senior unsecured debt at 'A+(lka) and its subordinated debt at 'A(lka)'. KEY RATING DRIVERS - NATIONAL RATINGS AND DEBT CF's rating reflects its strong capitalisation, which is supported by robust profitability and high profit retention. Counterbalancing these strengths are the pressure on loan quality and its low provisioning levels compared with its peers'. The rating also captures CF's high margins, which are supported by the company's strength in raising funds at relatively low rates through the solid franchise developed over a long operating history. CF has historically maintained strong capitalisation. The regulatory reported Tier 1 capital ratio was 24.92x at end-June 2014 and the Fitch core capital (FCC) ratio was higher at around 40x. The FCC is higher because it captures the revaluation reserves, while the consolidated equity position and the balance sheet equity used are higher due to lower loan impairment charges that are in line with international accounting rules. CF's asset quality continued to be under pressure, with its regulatory non-performing loans (loans overdue by six months or more) increasing to 3.8% at end-June 2014 from 2.45% at end-June 2013. This was due to a slowing macroeconomic environment and the company's exposure to the agricultural sector, which has been adversely affected by unfavourable weather conditions. The regulatory non-performing loans (including interest in suspense) increased by 46% in the financial year ended 31 March 2014 (FY14) and by 18% in 1Q15. The ratio of impairment reserves to gross loans increased to 1.3% at end-June 2014 from 1.0% three months earlier. This is still low compared to peers and implies a lower provisioning coverage. The company has sufficient unutilised credit lines to fund its maturity mismatches. CF's well-established deposit franchise supports liquidity. Customer deposits funded about 50% of CF's assets and were fairly granular with 88% of loan contracts being for loans under LKR1m (USD7,700) at 1Q15. CF's senior unsecured debentures are rated in line with CF's National Long-Term Rating of 'A+(lka)' as they constitute unsecured and unsubordinated obligations of the company. The senior secured debentures, which are secured by a primary mortgage over receivables from identified hire-purchase and lease agreements, are also rated in line with CF's National Long-Term Rating. There is no rating uplift for the collateralisation as the note's recovery prospects are assessed to be average and comparable with those of the unsecured notes in a developing legal system. The subordinated debentures are rated one notch below CF's National Long-Term Rating of to reflect their subordination to senior unsecured creditors. RATING SENSITIVITIES - NATIONAL RATINGS AND DEBT Greater product diversity, together with improved funding flexibility commensurate with higher-rated peers, could lead to an upgrade. However, taking into account the current pressure on its asset quality, Fitch does not see an upgrade as likely in the medium term. CF's rating could be downgraded if it is not able to provide a buffer against further loan quality deterioration through profit, which would lead to an increase in unprovided NPLs relative to equity. The debt ratings will move in tandem with CF's National Long-Term Rating. CF is a Licensed Finance Company established in 1957. It is 22.6% held by the Wijenaike family, the founders of the company, 16.1% owned by Corporate Services (Pvt) Ltd, and the rest is publicly held. The company's lending portfolio consists largely of vehicle financing. Contacts: Primary Analyst Nayantara Bandaranayake Analyst 941 1254 1900 Fitch Ratings Lanka Limited 15-04, East Tower, World Trade Center Colombo 01, Sri Lanka Secondary Analyst Kanishka De Silva 941 1254 1900 Committee Chairperson Jonathan Lee Senior Director +886 2 8175 7601 Media Relations: Bindu Menon, Mumbai, Tel: +91 22 4000 1727, Email: bindu.this site CF has a 1.79% equity stake in Fitch Ratings Lanka Ltd. No shareholder other than Fitch, Inc. is involved in the day-to-day rating operations of, or credit reviews undertaken by, Fitch Ratings Lanka Ltd. Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(lka)' for National ratings in Sri Lanka. Specific letter grades are not therefore internationally comparable. Additional information is available at this site Applicable criteria, "Global Financial Institutions Criteria", dated 31 January 2014, "National Scale Ratings Criteria", dated 30 October 2013, "Recovery Ratings for Financial Institutions", dated 24 September 2013, "Finance and Leasing Companies Criteria" dated 11 December 2012 and "Assessing and Rating Bank Subordinated and Hybrid Securities" dated 5 December 2012 are available at this site Applicable Criteria and Related Research: Finance and Leasing Companies Criteria here Recovery Ratings for Financial Institutions here National Scale Ratings Criteria here Global Financial Institutions Rating Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW. FITCHRATINGS. COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

For egypts entrepreneurs, going green makes business sense


CAIRO (Thomson Reuters Foundation) - As young people across the Middle East grapple with a lack of employment, a growing number of Egyptian entrepreneurs are learning that eco-friendly businesses can solve environmental problems and boost their bottom line. The region’s burst of innovation is driven partly by greater access to technology and a youthful population, with over 30 percent aged between 15 and 29, experts say. But necessity is also a major factor."For thousands of young people, there are no job opportunities, so they are creating them for themselves," Salma El Hariry, founder and CEO of ScaleUp Ventures, told the Thomson Reuters Foundation. "Entrepreneurship is booming, and with this, there is an absolute shift in how startups talk about issues like energy and the environment."A February report from the Middle East Strategy Task Force, co-chaired by former U.S. Secretary of State Madeleine Albright and former U.S. National Security Advisor Stephen Hadley, noted that more than 2,500 jobs are generated for every 10 successful startups."Even as the specter of political instability weighs heavily on the region, the Middle East is quietly experiencing a technological and societal transformation that could hold the keys to a better future," the report's authors wrote. Egypt is embracing that transformation. Although funding remains a critical challenge, the country is host to a handful of incubators that support entrepreneurs as they build their companies. One player is the American University in Cairo's (AUC) Venture Lab. In the four years since it was set up, Venture Lab has helped at least 46 startups, which together have generated revenues of 36 million Egyptian pounds (over $4 million). Similar initiatives across the region - including Wamda, Oasis500, Sawari Ventures, Berytech, Flat6Labs and AstroLabs - are also fostering an enabling environment for entrepreneurs. Last year, a study by Wamda, a network for entrepreneurs that also carries out research, found that of the nearly 50 percent growth in organizations supporting new ventures in the Middle East since 2010, Egypt alone claims a quarter. "A broader emphasis on entrepreneurship helps socially responsible startups raise awareness and allows them to link their cause to the business of enterprise," said Anna Dimitrova, lead account manager for Cairo-based Nahdet El Mahrousa, the first incubator of social enterprises in the Middle East.

"There are waves and trends in entrepreneurship," she added. "Green is the new buzzword."SUSTAINABLE AT SCALE Even if the goal is to find answers to the problems posed by climate change, success may lie in keeping it simple, said Hazem Hassan, co-founder of Madad, a platform for sustainable development projects that helps people make and track donations."Climate change doesn't appear anywhere on our project descriptions," Hassan said. "These are heavy terms. If your target is the masses, or even a diverse crowd, you need to simplify and personalize your message."

Madad, which is incubated in the AUC Venture Lab, describes itself as the first sustainability-focused crowdsourcing website in the region. "There are a lot of people interested in putting their money into long-term sustainability projects but they don't have the means to reach those projects,” Hassan said. One of Madad's projects raised funds to bring solar power to the village of Heiz in Egypt’s Bahariya Oasis. Contributors, including one couple who asked their wedding guests to donate in lieu of gifts, raised 85,000 Egyptian pounds ($9,600). The project aims to help the village's 3,000 residents, who are not connected to the grid, install solar panels and batteries to access power round the clock. SMALL IS BEAUTIFUL

Many eco-entrepreneurs spot opportunities in local challenges that the government and financial markets have been unable - or unwilling - to address. "Market failures are always sources of inspiration for enterprise," said Ahmed Huzayyin, co-founder of CleanTech Arabia, which works with startups in renewable energy, waste management, water and transport. "Finding the overlap between global and local trends is where the sweet spot lies."While there is no official data on how many companies in Egypt are working on environmental issues, El Hariry of ScaleUp Ventures said evidence from entrepreneurship summits suggests "at least 10 percent" of all new startups are in the green space."This is a grassroots, bottom-up shift," she said. "People want to solve problems that the government and, at times, the market have failed to fix."Besides a crop of businesses looking at off-grid and solar energy solutions, there are organizations like RecycloBekia, which offers the Arab world’s first green recycling of electronic waste; Nawart, which guides the growth of renewable energy businesses; and Ain Bicycles, which promotes cycling in heavily polluted and congested Cairo. Nahdet El Mahrousa, in partnership with the SwitchMed initiative, received over 500 applications earlier this year for its Green Entrepreneurs training, more than it has ever seen for similar programs. Most of the startups that applied were looking at small-scale challenges. "Entrepreneurs in this market may not be aiming to address climate change as a goal in and of itself, but their projects are addressing local environmental concerns," Dimitrova said. "Climate change is a global problem that needs local solutions. The lesson here is that little changes have an impact."