Lanka Rating Upgrades Entity Rating of

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Capital Alliance PLC

02-Dec-25

01

Applicable Criteria

Methodology | Financial Institution Rating | Aug-24

02

Related Research

Sector Study | Primary Dealer | Feb-25


03

Analyst

Gayani Randima Ariyawansa | gayani@lra.com.lk
+94 114 500099 | www.lra.com.lk

PRESS
RELEASE

DISCLAIMER

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to LRA

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Rating Type Entity
Current
(02-Dec-25) 		Previous
(15-May-24)
Action Upgrade Initial
Rating A+ A
Outlook Stable Stable
Rating Watch - -


Capital Alliance PLC ("CALT" or "the Company") holds a strong position in the Primary Dealer (PD) market, as it operates as one of the largest non-bank primary dealers in Sri Lanka. Primary Dealers are inherently exposed to market risk due to the changing interest rate environment. Meanwhile, the credit risk of the PDs remains minimal due to their exposure to Government Securities (G-Sec). The rating upgrade incorporates CALT’s robust capitalization, strong process controls, and notable improvement in profitability and retained earnings. In line with Industry peers, CALT generated exceptionally high Profit-After-Tax (PAT) amid a steep decline in interest rates during FY24 (PAT: LKR~13.9bn). The profitability remained strong in FY25 (LKR~4.4bn) and 6MFY26 (LKR~1.9bn) as interest rates stabilized, and the Company sustained its positive spread and higher trading volumes. The Company reported a Net Interest Income (NII) of LKR~1.4bn in 6MFY26 as compared to LKR~1.6bn in 6MFY25. Despite dividend payouts, the Company’s profit retention is high. As of 6MFY26, CALT’s total equity stood at LKR~15.0bn (FY25: LKR 14.4bn), offering a substantial cushion against potential contingencies and exceeding the CBSL’s minimum capital requirement of LKR 2.5bn. CALT reported a Capital Adequacy Ratio of ~20.43% as at 6MFY26 (FY25: ~16.5%), comfortably above the regulatory minimum requirement of 10%. The rating also factors in the Company’s recent diversification strategies to enhance its product slate, which is expected to augment its future growth. Moreover, synergies emanating from its association with Capital Alliance Group and a strong backing of its parent, Capital Alliance Holdings PLC (“CALH”), remain a key rating consideration. The Company has defined limits to mitigate risks, with an independent risk monitoring department in place. Going forward, the Company is expected to sustain its performance trend given a stable interest rate environment. This may, however, be impacted due to adverse movement in interest rates.

The rating is dependent on the Company's ability to sustain and further strengthen its strong market position in the sector as a non-bank PD. Sound financial practices, particularly including adherence to defined limits and risk exposure, are important. Additionally, sustaining profitability trends and capital buffers amid changing interest rates is critical.
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About the Entity

Capital Alliance PLC (CALT) was incorporated on August 10, 2000, as a public limited liability company under the Companies Act, No. 07 of 2007. In April 2003, CALT was appointed as a primary dealer of government securities by the Central Bank of Sri Lanka (CBSL) and was listed on the Colombo Stock Exchange in December 2021. The largest shareholder of the Company remains Capital Alliance Holdings Ltd with ownership of ~86%. Its primary business operations involve primary dealing and secondary trading in government securities.

Lanka Rating Agency Limited

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