Fitch affirms long-term ratings of four commercial banks

Fitch Ratings Lanka said yesterday it has affirmed the National Long-Term ratings of Bank of Ceylon (BOC), People’s Bank (PB), Commercial Bank of Ceylon PLC (CB) and Sampath Bank PLC (SB).

Fitch has also affirmed and simultaneously withdrawn the Individual and Support ratings of the four banks as these ratings are no longer relevant to Fitch’s coverage. A full list of ratings action is provided at the end of this commentary.

BOC’s and PB’s ratings reflect their high systemic importance as the largest and second-largest banks of Sri Lanka, respectively, their State ownership, and their strong franchise. The Positive Outlooks largely reflect the prospect of a potential improvement in the Government’s financial profile as indicated by the Positive Outlook on Sri Lanka’s Long-Term Issuer Default Rating of ‘B+’, and its consequent increased capacity to provide support to the banks.

CB’s ratings reflect its strong franchise, sound profitability and its strong capital position. The Stable Outlook reflects the improvement in the bank’s credit profile in terms of its asset quality and solvency indicators since Q310 and Fitch’s expectation for a further improvement supported by the economic environment and equity accretion and/or infusion.

SB’s ratings reflect its strong and growing franchise, sound profitability and its strong capital structure. The Positive Outlook reflects ongoing structural improvements within the bank since early 2009 across most spheres of risk management, which in Fitch’s view is helping SB to improve its credit profile at a faster pace than its peers.

BOC:

National Long-Term rating affirmed at ‘AA(lka)’; Outlook Positive

Subordinated debentures affirmed at ‘AA-(lka)’

Individual rating affirmed at ‘D/E’; rating withdrawn

Support rating affirmed at ‘4’; rating withdrawn

PB:

National Long-Term rating affirmed at ‘AA-(lka)’; Outlook Positive

Individual rating affirmed at ‘D/E’; rating withdrawn

Support rating affirmed at ‘4’; rating withdrawn

CB:

National Long-Term rating affirmed at ‘AA(lka)’; Outlook Stable

Subordinated debentures affirmed at ‘AA-(lka)’

Individual rating affirmed at ‘D/E’; rating withdrawn

Support rating affirmed at ‘5’; rating withdrawn

SB:

National Long-Term rating affirmed at ‘AA-(lka)’; Outlook Positive

Subordinated debentures affirmed at ‘A+(lka)’

Individual rating affirmed at ‘D/E’; rating withdrawn

Support rating affirmed at ‘5’; rating withdrawn