Lanka Rating Maintains


Debt Instrument Rating of

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Alliance Finance Company PLC - Green Bond

30-Jan-26

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Applicable Criteria

Methodology | Debt Instrument Rating | Aug-24

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Related Research

Sector Study | Leasing & Finance Companies | Feb-25


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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 Debt Instrument
Current
(30-Jan-26) 		Previous
(06-Jun-25)
Action Maintain Upgrade
Rating A+ A+
Outlook Stable Stable
Rating Watch - -


The assigned rating reflects financial guarantee (unconditional and irrevocable by Seylan Bank) structure of the Green Bond holders. The guarantee covers both interest and principal payments of maximum LKR~1.107bn in case of non-payment by Alliance Finance Company PLC’s (‘AFC’ or 'the Company's'), the issuer. The rating also draws support from AFC's sustained financial performance during 1HFY26, supported by a gradual recovery in credit demand and continued focus on sustainable financing. Net Interest Income (‘NIM’) of the Company increased by ~22.34% year-on-year (YoY) to around LKR~4.7bn (1HFY25: LKR~3.9bn), primarily driven by higher interest income from loans and advances as lending activity strengthened. Meanwhile, cost of funds remained low as interest rates have stabilized. Profit After Tax ('PAT') rose to LKR~902.4mn (1HFY25: LKR~569.7mn) in 1HFY26 in line with industry trend, reflecting improved core profitability. Asset quality remained relatively stable, with the non-performing loan (NPL) ratio reported at about ~6.8%, around industry average. The Company’s capital position remained adequate, with a total capital adequacy ratio (CAR) of ~14.5% as at 1HFY26, above the regulatory minimum of 12.5% prescribed by the Central Bank of Sri Lanka (CBSL). The CAR remains below the sector average and peers. The assigned rating also factors in the anticipated improvement in AFC’s capital buffers following the proposed subordinated bond issuance, which is expected to provide capacity to support balance sheet growth.

The rating is dependent on the credit profile of the guarantor, Seylan Bank, and any material change in this regard will be accordingly incorporated in the debenture rating. The rating will remains sensitive to AFC's ability to achieve its strategic objectives while improving its profitability, sustaining asset quality, and achieve performance indicators.
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About the Entity

AFC is a public listed company incorporated in 1956 under the provisions of the Companies Ordinance No. 51 of 1938 and re-registered under the Companies Act No. 07 of 2007. The largest shareholder of the Company remains Mr. R K E P De Silva with ownership of ~36.87% as of 1HFY26. The Company has a nine-member Board, out of which three are Independent Directors and three are Non-Independent Non-Executive Directors (NEDs). The Management team is headed by Mr. De Silva who leads the Company as the Managing Director and the Deputy Chairman as well.


About the Instrument

AFC has issued a 3-year Green Bond of face value of LKR~1000mn. The interest rate on the bond is fixed and is ~10.75% per annum (p.a.), and repayments are made on a semi-annual basis. The Green Bond is fully secured by Seylan Bank's unconditional and irrevocable financial guarantee that will cover the entire Face Value and two interest payments of up to maximum of LKR~1.107bn. The bond holders have recourse to both Seylan Bank and AFC in case of non-payment of interest and/or principal.

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