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Fitch Ratings 2017

Key Rating Drivers

Stable credit profile:Central Finance Company PLC's(CF) rating reflects its established franchise,strong capitalisation and above-industry profitability.These strengths are offset to an extent by its still-weak asset quality relative to similarly rated peers,high risk appetite stemming from its loan book concentration on registered three-wheelers and potential pressure on profitability from a weakening market share.CF is Sri Lanka's fifth-largest licensed finance company(LFC),accouting for 6.3% of sector assets at end March 2017(FY17).

Sustained strong capital Buffers:CF's Tier 1 capital ratio and Fitch core Capital Ratio (FCC)stood at 32.3% and 42.1% respectively as at end-FY17,maintaining its position as the highest capitalised LFC among our rated peers.CF's strong capitalisation is supported by high profitability and conservative dividend practices.Fitch Ratings views positively CF's policy of supporting capitalisation through profit retention in order to provide adequate buffers against any significant asset quality deterioration in the future.

Asset Quality pressure to Moderate: Fitch does not expect significant pressure on asset quality in the near term due to reduced loan-to-value(LTV) rations and CF's conservative growth strategy in the recent past.CF's reported non-performing loan (NPL)ratio improved from 4.5% in FY15 to 3.5% by end-FY17,aided by strengthened underwriting standards and an increase in the value of underlying collateral in its leasing business.However,CF's unprovided NPLs as a percentage of equity remains high because of lower provisioning compared with peers.

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Leasing of Foton Trucks

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Central Finance offers a special leasing package with free insurance on Foton Trucks as well as an attractive discount from Indra Traders.Visit one of our branches or call 0112315315/0772228111 for details.