JF's Net Interest Income rose ~20% YoY to LKR ~2,146 Mln in FY25, despite a ~3% drop in interest income, supported by a ~17% decline in interest expenses due to a more granular deposit base. PAT improved modestly to LKR ~371 Mln (FY24: ~LKR 348 Mln). The CAR (Tier-I) declined to 12.09% in FY25 (FY24: 15.22%), while the share of top 20 deposits reduced to ~17% (FY24: ~21%), indicating lower concentration risk. The Company's market share remained stagnant as the overall sector followed an aggressive growth strategy. Asset quality remained stable with NPLs at ~7.7%, below the industry average of ~8.3%. JF has a modest capital structure with the Company's CAR (Tier-I) standing at ~12.09%, well below the industry average of ~19.7%. However, this is above the CBSL minimum requirement of ~8.5%. This could limit expansion plans, although the Company is exploring options to strengthen it.
The assigned “Positive Outlook” reflects the Company’s sustained performance indicators. Realization of growth plans, envisaged profitability, and improvement in CAR are important for upward rating movement. Improvement in core income, cost rationalization, and enhanced competitive positioning through market share gains and revenue diversification will support credit strength. Continued regulatory compliance, retention of key personnel, and consistent profitability remain essential to maintaining the current rating. Deviation or deterioration in key financial metrics, especially profitability, asset quality and CAR, will have negative rating connotation.