"PMB's rating takes into account its modest profitability and satisfactory asset quality," Fitch said.
It also considered the potential support from its two main shareholders People's Bank ('A-(lka)'/Positive Outlook) and DPMC Financial Services Ltd (a fully owned subsidiary of David Peiris Motor Company), but said the rating is constrained by PMB's relative size.
PMB's assets had grown 44 percent by the financial year 2007 but remained small at 1.65 billion rupees.
PMB is a listed merchant bank and is also a registered finance leasing firm. But Fitch says its focus on merchant banking has reduced with fee based income falling from 17 percent of total income in 2003 to 3 percent now.
Vehicle financing through leases and hire purchase agreements to the small and medium enterprise sector, accounted for 89 percent of PMB's loan book, with bills of exchange and loans making up the balance.
PMB's small exposure to real estate development thro