...Stressed Financial Profiles: Fitch Ratings expects Sri Lankan non-banking financial institutions (NBFI) to continue to face pressure on asset quality and profitability in the medium term. A slowdown in Sri Lanka's economic activities and lacklustre growth in the sector's core vehicle-financing segment continue to weigh on NBFI's financial profiles. Furthermore, higher taxes on financial institutions would pose an additional threat on smaller NBFIs in meeting enhanced capital requirements due to a further weakening in internal capital generation. Muted Growth Prospects: Macro-prudential policy measures taken by the authorities since 2015 to curb imports, and stringent rules on vehicle financing, could continue to dampen growth prospects. Leasing and hire purchases made up the largest proportion of sector loans, with 53% at end-December 2018. Loan growth year-on-year had already slowed to 9.0% by end-2018 from a high of 31.0% in 2015, due to the imposition of tighter loan-to-value ratios...
