Nations Trust Bank PLC (NTB), the banking arm of John Keells group is to raise up to Rs.5 billion through a listed debenture issue.
Fitch Ratings has assigned an expected National Long Term rating of ‘A-(lka)’ to the issue, one notch below NTB’s National Long-Term Rating to reflect the subordination to senior unsecured creditors.
NTB plans to use the proceeds to support its Tier 2 capital base, diversify its funding mix and reduce structural maturity mismatches.
As at June 30, 2016, NTB’s Tier I and Tier 2 capital adequacy ratios stood at 9.89 percent and 11.54 percent, respectively, closing in the regulatory minimums.
The proposed debentures will mature in five years and carry fixed and floating coupons. The debentures are to be listed on the Colombo Stock Exchange.
NTB narrowed its June quarter (2Q16) net profit by 10 percent to Rs. 685.9 million as the growth in loans slowed and margins thinned amid rising interest rate scenario.
For the first half the bank posted a net profit of Rs.1.28 billion, an increase of just 2 percent from the same period last year.
As of June 30, John Keells group held almost 30 percent of the issued shares of NTB.