Specialist Lender

Dec 21, 2008 (LBO) – Sri Lanka's Edirisinghe Trust Investments (ETI), a registered finance company, has been upgraded by one notch to 'BB-(lka)' Fitch Ratings said, while its outlook has been lowered to 'stable' from 'positive' at the new credit level. Real estate, in the form of housing development projects and land, marketed to the upper-middle income and middle-income segments, consisted of 14.2 percent of assets.

"The company has expressed intensions to curtail real estate investments, given the current slowdown in demand for this product," Fitch said.

"Asset quality compares favourably against the sector, due to ETI's high exposure to pawnbroking."

High redemption rates and demand for gold has meant that the company has the ability to dispose its unredeemed gold stock with relative ease, accumulating zero NPLs (non-performing loans) in this product.

"Increased repossession of vehicles enabled ETI to improve the gross NPL ratio to 8.0 percent in the first half of 2009 from 11.3 percent at the 2008 financial year end.

Fitch defines NPLs as loans in arrears of over three months.

"Increased operating expenditure due to rapid expansion and inflationary pressures, and a significant decline in income generated via real es