Fitch affirms 9 Lankan banks; downgrades Sampath

9 July 2015 02:49 am - 0 - {{hitsCtrl.values.hits}}

A A A

Fitch Ratings has affirmed the ratings on nine of Sri Lanka’s banks, both state-owned and private banks.

The long-term Issuer Default Ratings (IDRs) on National Savings Bank and Bank of Ceylon (BoC) have been affirmed at ‘BB-’ and their national long-term ratings have been affirmed at ‘AAA(lka)’ and ‘AA+(lka)’, respectively. Fitch has also affirmed the national long-term rating of People’s Bank at ‘AA+(lka)’.
Fitch said the ratings reflect the “extraordinary support” the banks get from the government of Sri Lanka and their systemic importance.

“Their stable outlook mirrors the stable outlook on the sovereign’s rating,” Fitch said.

At the same time, Fitch has affirmed the long-term IDRs of DFCC Bank PLC at ‘B+’ and the national long-term ratings of DFCC and DFCC Vardhana Bank PLC at ‘AA-(lka)’.

National Development Bank PLC’s (NDB) national long-term rating was affirmed at ‘AA-(lka)’.

Fitch also affirmed NDB’s long-term IDR at ‘B+’ and subsequently withdrew the rating due to commercial reasons.

Furthermore, Fitch has affirmed the national long-term rating of Commercial Bank of Ceylon PLC (Commercial) at ‘AA(lka)’, Hatton National Bank PLC (HNB) at ‘AA-(lka)’ and Seylan Bank PLC at ‘A-(lka)’.

Fitch has downgraded the national long-term rating of Sampath Bank PLC to ‘A+(lka)’ from ‘AA-(lka).

The downgrade of Sampath Bank’s national long-term rating reflects the weakening of its capitalisation relative to peers, which offset benefits from the growth of its franchise.

Fitch expects that this trend will continue as the bank is not likely to be able to sustain growth purely through retained earnings.

The bank’s core capital ratio declined to 10.6 percent at end-March 2015 from 13.1 percent at end-December 2013. Its regulatory Tier 1 ratio also deteriorated to 8.3 percent from 10.1 percent over the same period while the Tier 1 ratio of its direct peers remained above 11 percent.

“The weakening was mainly due to a shift in Sampath Bank’s loan book towards consumer and retail loans which carry a higher risk weight. Pawning advances, which were zero risk weighted, decreased to 6.6 percent of loans at end-March 2015 from 19.4 percent at end-2013.”

Fitch maintains a stable outlook for the Sri Lankan banking sector. This is because the sector credit profile is not likely to deteriorate materially even though there could be downside pressure on asset quality and profitability.

The national long-term ratings of Seylan Bank reflects Fitch’s view that the state would provide it extraordinary support in case of need because the regulator has classified it as one of six domestic systemically important banks. Fitch assigns Seylan Bank a lower support-driven rating because it has a smaller market share compared with its larger peers.

Fitch considers Commercial Bank as the strongest bank in this peer group. Its rating captures its more measured risk appetite, solid franchise, sound track record and strong funding profile. The bank’s provision coverage has been improving and asset quality has remained satisfactory. The ratings reflect our expectation that its operations in Bangladesh will remain small.

HNB’s rating reflects its strong franchise, satisfactory capitalisation, established track record and higher risk appetite compared to better-rated peers. Its senior debentures carry the same rating as they rank equal with other unsecured obligations.

Order Gifts and Flowers to Sri Lanka. See Kapruka's top selling online shopping categories such as Toys, Grocery, Kids Toys, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,Astrology, Courier/Delivery, Medicine Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka

Comments - 0

Add comment
Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Fitch affirms 9 Lankan banks; downgrades Sampath

Comments - 0

Add comment

RECOMMENDED

UDA owned land in Thalawathugoda; UDA Minister Prasanna Ranatunga under the spotlight for forceful occupation of reserved land

Loss-making SMIB faces political pressure in recovering loans

Baltimore Bridge Collapse: MV Dali, SL authorities anchored in mystery?

Has Sri Lanka become a potential hub for the illegal wildlife trade?

Spotlight on Moragahakanda Development Project Moragolla villagers lose livelihoods and down to one meal a day

Ambitious Sri Lankan jobseekers ‘trafficked into Ukraine war zones’

Western purple-faced langurs see blue!

Most Viewed in News

Street food vendor arrested for verbally harassing foreigner

Belgian traveller scammed in Kalutara

A US “Kaputa”, a Lankan “Nariya” and a Presidential “Feast”

New Visa procedure implemented

Suspicious death of 23-year-old woman at hotel sparks concerns

April 15 declared a government holiday

MIRROR CRICKET

How does CSK get best out of Pathirana?

Mendis, Mathews move up in ICC Test Rankings

Chamodi, Dewmi spins Sri Lanka U19 Women to big win

Amir, Wasim return to Pakistan national team

TODAY'S HEADLINES

100 Police personnel trained to target criminals operating on motorbikes

Catholic Church receives full report

Complaint lodged over Piumi Hansamali’s possession of Gota’s Range Rover

We are struggling with severe shortage of staff – Excise Chief

Mendis, Mathews move up in ICC Test Rankings

Security raised for Champions League ties after threat

SLA target four events at Paris Olympic Games

Chamodi, Dewmi spins Sri Lanka U19 Women to big win