Asia Asset Finance PLC (AAF), a subsidiary of India’s Muthoot Finance Limited, has delivered an exceptional financial performance for the first half of the financial year ended 30 September 2026. Coupled with robust earnings growth and improved asset quality, the company is preparing to fuel its next phase of expansion through a proposed Rs. 2 billion senior unsecured debenture issue, rated ‘A+(EXP)(lka)’ by Fitch Ratings.
Exceptional Financial Performance
For the six-month period ending 30 September 2026, AAF recorded a remarkable 110% year-on-year increase in Profit After Tax (PAT), reaching Rs. 838.5 million compared to Rs. 400 million in the corresponding period last year. Profit Before Tax (PBT) surged by 140% to Rs. 1.62 billion, while interest income expanded by 75% year-on-year to Rs. 6.86 billion. Net interest income grew 92% to Rs. 3.78 billion, driving the company’s annualised Return on Equity (ROE) to 28.5%.
The Chief Executive Officer of Asia Asset Finance PLC, Rajiv Gunawardena, attributed the impressive operational performance to deliberate cost controls, accelerated digitisation, and prudent allocation of funds to high-yielding, quality assets.
Strong Balance Sheet and Portfolio Quality
AAF’s total assets expanded by 24% from 31 March 2026 to stand at Rs. 66.63 billion as of 30 September 2026. Net loans and advances reached Rs. 51.88 billion, largely driven by strong demand for secured lending. Gold loans continue to form the backbone of the company’s lending strategy, accounting for approximately 73% of the total portfolio.
Customer deposits registered a 37% growth over the six months, reaching Rs. 35.51 billion, signaling strong consumer trust. Equity capital was further reinforced as shareholders’ funds rose 47% to Rs. 7.01 billion, boosted by retained earnings and a successful Rs. 1.50 billion rights issue. Meanwhile, asset quality improved significantly, with the gross non-performing loan (NPL) ratio declining to 7.6% from 9.4% a year earlier.
With a 125-branch network across Sri Lanka, AAF continues to promote financial inclusion, with women representing 56.6% of its active customer base.
Rs. 2 Billion Debenture Issue to Support Loan Expansion
To support its continued portfolio expansion, AAF plans to raise up to LKR 2 billion through five-year senior unsecured debentures to be listed on the Colombo Stock Exchange.
Fitch Ratings has assigned an expected National Long-Term Rating of ‘A+(EXP)(lka)’ to the proposed issue, aligning it with AAF’s National Long-Term Rating of ‘A+(lka)’ with a Stable Outlook. According to Fitch, the issue rating reflects equal ranking with claims of the company’s other senior unsecured creditors and benefits from potential extraordinary support from its 78.4% parent entity, Muthoot Finance Ltd—India’s largest gold-backed lender.
Combining impressive profitability, enhanced capital buffers, and strong parentage, Asia Asset Finance remains strategically positioned to deliver sustainable long-term value to its customers, shareholders, and Sri Lanka’s broader financial sector.
