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Health crisis exacerbates downside risks to FLCs

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‘Most of FLCs’ borrowers will not emerge unscathed from economic downturn’

The risk of a second coronavirus wave, together with weak borrower sentiment in an already fragile operating environment, would put further stress on Sri Lankan finance and leasing companies’ (FLCs) credit profiles, adding to existing pressures on asset quality and profitability, Fitch Ratings Sri Lanka said last week.

“These risks will test FLCs’ loss-absorbing capacity, but Fitch Ratings believes that the capital and profit buffers of most Fitch-rated standalone-driven FLCs’ (except for Bimputh, which will experience material capital erosion due to losses) will be adequate to cushion against moderate asset-quality shocks.

Fitch expects Sri Lanka’s real GDP to contract by 3.7% in 2020 due to the pandemic. The economic fallout has pressured the FLC sector’s asset quality with the six-months past due non-performing loans (NPLs) ratio spiking to 14.1% by end-June 2020 (1QFY21) (FYE20:11.4%). The sector’s return on assets turned negative to -2.3% in 1QFY21 (FYE20:1.9%) due to high credit costs.

“Sector’s growth challenges are worth watching. A prolonged restriction on vehicle importation and the resultant surge in second-hand vehicle prices are likely to hamper Sri Lankan FLCs’ medium-term growth prospects. The sector’s loans contracted by 0.2% yoy in 1QFY21 (CAGR of 12% FY15-FY20), and leasing and hire purchases accounted for 55% of the sector’s lending (FYE15:60%)”.

Referring to asset quality risk after moratorium, Fitch Ratings said, “We expect underlying asset-quality pressure that has been building up due to the pandemic to manifest from 3QFY21 and extend to FY22, as regulatory relief in the form of loan-repayment moratoriums has temporarily halted the recognition of credit impairments for much of this year. We believe that most of the FLCs’ borrowers will not emerge unscathed from the economic downturn because they are largely sub-prime”.

“Weak earnings due to rising credit costs and slow loan growth will weigh on FLCs’ internal capital generation. We view this risk as more acute for small FLCs which already have weak profitability buffers, with credit costs consuming more than 70% of their pre-impairment operating profits”.

“A deadline extension to meet capital requirements and lower loan growth will ease near-term capital pressures for some companies. Out of 38 licensed finance companies in the sector, nine were non-compliant with minimum capital requirements at end-September 2020 and the Central Bank of Sri Lanka (CBSL) has granted an extension to rectify the non-compliance.

“Banks’ diminished appetite to lend to the FLC sector could hurt small-to mid-sized FLCs in particular, hampering their financial flexibility. Small entities tend to rely more on bank funding, while large FLCs’ better domestic franchises will underpin their liquidity profiles”, Fitch Ratings said.



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Dialog Enterprise with Fortinet strengthens the security of its Managed SD-WAN Service for Sri Lankan Enterprises

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Dialog Enterprise, the corporate solutions arm of Dialog Axiata PLC, announced the strengthening of its Flexnet managed SD-WAN service leveraging the Secure SD-WAN solution from Fortinet, a global leader in cybersecurity with broad and integrated solutions.

Dialog Enterprise pioneered the Sri Lanka’s first Managed SD-WAN service with the release of its Flexnet offering since September 2019. Two years after, most modern organisations are embracing digital acceleration, driving demand for greater agility in networks in order to stay competitive and deliver superior customer experiences. With the scale and variety of cyber threats continuing to grow, Dialog Enterprise enhances its Flexnet service with the Fortinet Secure SD-WAN. Fortinet Secure SD-WAN accelerates network and security convergence, aims at simplifying WAN architecture, and securing work-from-anywhere new normality with embedded ZTNA (zero-trust network access) Access Proxy for explicit per-user application access controls. It delivers integrated security and safer access to internal and external data and applications wherever they are residing, on-premises, or in the cloud.

By integrating Fortinet Secure SD-WAN solution to its Flexnet managed SD-WAN service, Dialog Enterprise will enable its customers the ability to cost-effectively eliminate security gaps in their network while gaining the benefits of advanced routing and self-healing WAN capabilities to ensure superior quality of experience for their users, and an increased business uptime. Additionally, an improved connectivity and user experience can be achieved through an integrated security by prioritizing network traffic and reduced latency. As well as the benefit of an integrated security by prioritizing network traffic is achieved by offering, unified thread management, SSL inspection and proactive security threat prevention.

“With the recent shift to remote working, cloud adaptation and SaaS usage accelerating SD-WAN adoption with organizations, many of our customers in the government, finance, retail, services and manufacturing industries will benefit from Dialog Enterprise’s Managed SD-WAN based on the Fortinet Secure SD-WAN solution. It provides us with an integrated, one-stop management and orchestration console to ensure that connections, configurations, advanced routing features and protections are easily configurable. Being the only Fortinet Managed Security Service Provider in Sri Lanka, we have already been able to provide Secure SDWAN solutions with Fortinet in over 1000 locations across the island.” said Navin Pieris, Group Chief Officer – Dialog Enterprise at Dialog Axiata PLC.

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SLT-MOBITEL completes first phase of Amazon Alexa integrations for Home Broadband customers offering exciting digital lifestyles

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The first phase of fully integrating Amazon Alexa for SLT-MOBITEL Home Broadband customers was successfully concluded recently. Now customers can seek help from Amazon’s virtual smart assistant Alexa and obtain a range of information on SLT-MOBITEL services such as Voice, Broadband, PEO TV services etc. ensuring subscribers experience exciting new intelligent built digital lifestyles.

Pictured Dilshan Boteju, Chief Executive Officer of The Connection Workshop, handing over the report on the concluded project to Prabhath Dahanayake, Chief Marketing Officer SLT. Also present were Lathika Weerasinghe, Administrative Coordinator, Anup Silva, Lead Developer Alexa program of The Connection Workshop, Ayoma Wickramaarachchi, Deputy General Manager, Product Development & Management of SLT, Ruwan Rekogama, Engineer-Product Development & Management of SLT.

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Loops wins big at SLIM DIGIS

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Award-winning creative-led integrated marketing agency, Loops Integrated, received 6 recognitions, including a Gold, at the SLIM DIGIS Awards, held on the 25th of January 2022. Loops Integrated received the only Gold DIGI in the Banking and Finance category for Softlogic Invest’s “This Could Be You” campaign, a Silver DIGI in the Performance Marketing category for British Council’s IELTS programme, and another Silver DIGI in the Best Use of Branded Content category for Sri Lankan Airlines. In addition to these three prestigious awards, Loops Integrated also received 3 finalist awards for the Banking & Finance, Performance Marketing and Best Use of Branded Content categories.

Discussing the awards, CEO at Loops, Wasaam Ismail said, “We work with our clients as partners, therefore it’s important to say a big thank you to them for having faith in us and letting us take their campaigns to town. Putting together creative-led campaigns amidst working from home during periodic lockdowns is nothing short of a herculean undertaking, which would not have been possible without our stellar team. Therefore, I must also acknowledge and appreciate our exceptionally talented, committed, dedicated and mind-blowingly fun team here at Loops, without whom none of this would be possible. A big thank you also to SLIM for ensuring that digital marketers in Sri Lanka have a national platform upon which to be recognized.”

The SLIM DIGIS awards is organized by the Sri Lanka Institute of Marketing (SLIM) and recognizes and celebrates Sri Lanka’s best digital marketing work, innovation and talent. SLIM is the national body for marketing in Sri Lanka and the SLIM DIGIS is among Sri Lanka’s most prestigious awards programmes that recognize innovation and budding talent in the digital marketing space.

Loops is an award-winning Creative Led Integrated Marketing Agency with operations in Sri Lanka, Qatar, Malaysia & Australia. The agency has worked with over 250 brands in 15 countries and has over 50 awards for its efforts in creative and digital excellence, awarded by both international and local bodies. Visit www.loops.lk to learn more.

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