Rating Release
Agusto & Co. hereby affirms the ‘Bbb-’ rating assigned to LAPO Microfinance Bank Limited with a stable outlook.
The rating expires on 30 June 2025.
Agusto & Co. hereby affirms the ‘Bbb-’ rating assigned to LAPO Microfinance Bank Limited (“the MFB” or “LAPO MFB”). The rating reflects LAPO MFB’s large market share in the microfinance industry, good retail affinity, adequate capitalisation and experienced management team. However, the rating is constrained by the MFB’s weak asset quality, rising operating costs which has dampened profitability, a high loan to deposit ratio of above 100% which in our view has increased the liquidity risk for the MFB and the volatile business environment. We have also considered the vulnerability of LAPO MFB’s primary target market to the prevailing macroeconomic headwinds, which has continued to weakened the ability of the clients to meet the loan obligations.
