CARE Nepal assigns BBB- to "12% ICFC Finance Debenture 2083"; rating indicates moderate degree of safety

CRNL has assigned Issuer Rating of „CARE-NP BBB- (Is)‟ to ICFC Finance Limited (ICFC). CRNL has also reaffirmed rating of „CARE- NP BBB-‟ assigned to Subordinated Debenture “12% ICFC Finance Ltd. Debenture 2083”. Issuers with this rating are considered to offer moderate degree of safety regarding timely servicing of financial obligations, in Nepal. Such issuers carry moderate credit risk. 

Key Rating Strength

• Long track record of operation with experienced board and management team
• Considerable growth in loans & advances and deposits over the period
• Moderate capital adequacy level
• Good asset quality however, slightly deteriorated in Q1FY20
• Diversified sector wise credit portfolio distribution
• Moderate concentration over top 20 depositors
• Healthy financial performance however, volatile over the period
• Comfortable liquidity profile

Key Rating Weaknesses

• Low level of CASA declining over the period
• Geographical concentration of business
• High concentration over top 20 borrowers however, decreased in Q1FY20
• Significant decrease in fair value of investment over cost price despite diversified investment portfolio
• Exposure to regulatory risks related to Finance industry
• Competition from other Finance Companies and Banks

About the Company  

ICFC is a national level class “C” finance company incorporated on September 22, 2003 as Investment and Credit Finance Company Limited which was changed to ICFC Finance Ltd. on March 1, 2010. It is licensed by NRB on July 14, 2004 and commenced operation on July 17, 2004. It is one of the leading finance company in Nepal. In terms of technology, it is using PUMORI PLUS IV software which enables to provide real time services to consumer across all branches. It has total assets size of Rs 14,439 Mn at the end of Q1FY20 which grew by 31.59% over FY19. At the end of Q1FY20 it has Rs 882 Mn paid up capital which is distributed among promoter and public shareholders in the ratio of 51:49 and the shares are listed in Nepal Stock Exchange Ltd. (Rs 1,367 Mn market capitalization as on November 27, 2019). Mr. Purshottam Poudyal (6.35%), United Distributor Nepal P.

Ltd. (3.79%), and Mr. Sushil Kumar Pant (3.62%) are major promoter shareholders of the company.

Source: careratingsnepal.com