NDB says mindful of need to infuse fresh capital

The National Development Bank (NDB) on Friday said it is mindful of the need to infuse fresh capital which is under consideration.

The Bank made this comment in a statement following the downgrade of its long term rating to A+ from AA- by Fitch.

Following is the full text of NDB’s statement:

Fitch Ratings Lanka Ltd. (Fitch) has assigned National Development Bank PLC (NDB) a long term national rating of A+(lka) with a Stable Outlook pursuant to Fitch’s annual rating review on NDB. This is a onenotch downgrade from NDB’s previous rating of AA-(lka)/ Stable Outlook.

According to Fitch’s report on its rating action for NDB, “the downgrade reflects the decline in NDB’s capitalisation alongside continued strong growth, and weaker profitability.  Fitch’s expectation that the bank’s higher risk appetite could dilute the benefit of a capital infusion has been incorporated in the rating action. NDB’s ratings reflect its satisfactory asset quality, weaker franchise and lower capitalisation relative to higher rated peers.”

The assigned subordinated debt ratings of NDB have moved in tandem with the banks’ national long term ratings, which are rated one notch below the national long term ratings to reflect the subordination to senior unsecured creditors. As such the subordinated debentures of NDB are now rated at ‘A (lka)’

NDB remains governed by a robust corporate governance and risk management framework and a strong strategic framework which ensure sustainable profitable growth. The Bank’s meticulous internal capital adequacy assessment process (ICAAP) ensures that the Bank attains sustainable growth levels that are commensurate to its capital. The Bank is also buffered against the high capital adequacy levels of the NDB Group, the Tier I of which is at over 10%, well above the statutory minimum requirement of 5%.

NDB is internally mindful of the need for the infusion of fresh capital, and will communicate its plans towards this end, once it is in a position to do so.

NDB remains committed to its ambitious profitable growth plans, in yielding sustainable returns to its shareholders, customers and all other stakeholders.