Fitch downgrading is despite strong financial indicators: Sampath Bank

Sampath Bank yesterday in a filing to the Colombo Stock Exchange yesterday responded to Fitch Rating’s decision to downgrade its rating from AA- to A+.

Sampath Bank said that during the recent past the bank had been improving its overall financial performance as reflected by many financial indicators. As per the financial statements published for the 1Q 2015, the bank maintained its Return on Assets at 1.33% and Return on Equity at 18.73% which compared very well with the industry peers and a Non-Performing Loan ratio of 1.84% which was the lowest among the peer banks. 

However, Fitch has downgraded the credit rating of Sampath Bank despite these strong financial indicators of the bank and purely on the “weakening of its capitalisation relative to the peers.”

In this connection, Sampath Bank said its total capital adequacy ratio and the Tier 1 ratio which amounted to 12.78% and 8.27% respectively as at 31.03.2015 remained well above the minimum ratios of 10% and 5% respectively, stipulated by the Central Bank. 

“Furthermore, the bank has been adopting a policy of leveraging its capital to an optimum level and will assure all its stakeholders that it will always maintain a capital buffer adequate enough to support its future expansion and risk profile,” Sampath Bank said in its filing.