Amana Bank upgraded by Fitch to BBB-(lka) investment grade; stable outlook

• Opens up multiple opportunities for growth and expansion

Chairman Asgi Akbarally

Managing Director/CEO Mohamed Azmeer

In its latest rating review carried out in August 2024, Fitch Ratings Sri Lanka has upgraded Amana Bank’s national long-term rating from BB+(lka) to an investment grade rating of BBB-(lka), with a stable outlook.

According to the communiqué issued by Fitch Ratings this rating upgrade reflects Amana Bank’s sustained improvements in its financial profile relative to better-rated peers. Fitch further stated that Amana Bank’s operating profit/risk-weighted assets ratio (four-year average of 2%, 1H24: 2.9%) has been improving despite the operating environment challenges that prevailed, supported by healthy net financing margins, sizeable trading gains from forex trading (four-year average of around 38% of operating profits) and lower credit costs. Fitch expects this improved profitability to be sustained in the medium term on account of the shift expected in the bank’s advance book towards high-yielding SME and retail segments, from low-yielding corporates. 

The bank’s recent “Investor Connect” video, published on the CSE website recently, highlights the strong growth in its total assets over the past decade. From Rs. 23 billion in 2013, the bank’s total assets have surged to Rs. 174 billion as of Q2 2024, reflecting a compound annual growth rate (CAGR) of 22%, significantly outpacing the industry average. This growth has translated in the bank’s Profit Before Tax (PBT) rising from a negative Rs. 438 million in 2013 to a positive 2.3 billion in 2023. During the first half of 2024 the bank has already reported a PBT of Rs. 1.4 billion, reflecting an impressive 68% YoY growth. 

The bank has consistently been successful in raising capital on numerous occasions, within the context of very challenging environments. In its most recent Rights Issue in November 2023, the bank received overwhelming support from both local and foreign investors, resulting in the bank’s capital growing by Rs. 6 billion, to reach Rs. 20 billion. 

Sharing his views on the rating upgrade Amana Bank Chairman Asgi Akbarally stated, “This significant upgrade to an investment-grade rating is a validation of the strong foundation we have built and performance at Amana Bank which will pave the way for multiple opportunities for growth and expansion, benefiting all stakeholders.” 

Commenting on the rating upgrade Amana Bank Managing Director/CEO Mohamed Azmeer stated, “We are honoured to have achieved an investment-grade rating in the latest Fitch review, a clear testament to the bank’s stability and resilience, reflected in our enhanced performance across key metrics. With a stronger capital base, sustained financial performance and a steadily growing balance sheet, we are well-positioned for accelerated growth and expansion, which we anticipate will positively impact our financial success and future ratings. I extend my deepest gratitude to our customers, whose unwavering support has been invaluable, to our shareholders for their continued confidence, and to our dedicated staff, the cornerstone of our success.”