Hatton National Bank at ‘A(lka)’; Outlook stable
Fitch Ratings has affirmed Sri Lanka-based Hatton National Bank PLC’s (HNB) National Long-Term Rating at ‘A(lka)’. The Outlook is Stable. At the same time, Fitch has affirmed HNB’s Sri Lankan rupee senior unsecured debt at ‘A(lka)’. The ratings on the bank’s proposed and outstanding Sri Lankan rupee subordinated debt have been affirmed at ‘BBB+(EXP)(lka)’ and ‘BBB+(lka)’, respectively. Intrinsic Profile Drives Rating: HNB’s National Long-Term Rating reflects its own financial strength, which is highly influenced by the bank’s exposure to the sovereign’s weak credit profile (Long-Term Foreign-Currency Issuer Default Rating (IDR): RD; Long-Term Local-Currency IDR: CCC-) and the ongoing sovereign debt restructuring, which has put pressure on HNB’s financial profile, particularly capitalisation and funding. The rating also reflects HNB’s superior domestic franchise as Sri Lanka’s fourth-largest commercial bank.
Restructuring Delays Hinder Progress: Sri Lankan banks’ operating environment (OE) continues to show signs of stabilisation, supporting the recovery in banks’ operational flexibility. There are sustained improvements in reported headline macroeconomic indicators, but persistent delays in the completion of the sovereign debt restructuring could impede the progress made so far, in Fitch’s view.
Commercial Bank of Ceylon at ‘A(lka)’; Outlook stable
Fitch Ratings has affirmed Commercial Bank of Ceylon PLC’s (COMB) National Long-Term Rating of ‘A(lka)’. The Outlook is Stable. At the same time, Fitch has affirmed the bank’s subordinated debt at ‘BBB+(lka)’ and proposed subordinated debt at ‘BBB+(EXP)(lka)’.
COMB’s rating is driven by its intrinsic credit strength and is highly influenced by the bank’s exposure to the weak credit profile of the Sri Lankan sovereign (Long-Term Foreign-Currency Issuer Default Rating: RD (Restricted Default), Long-Term Local-Currency Issuer Default Rating: CCC-). In addition, the ongoing sovereign debt restructuring has exerted pressure on COMB’s risk and financial profiles, particularly capitalisation and funding. Nonetheless, the rating is supported by the bank’s superior domestic franchise as Sri Lanka’s third-largest commercial bank.
The operating environment for Sri Lanka’s banks continues to show signs of stabilisation, supporting a recovery in banks’ operational flexibility. There are sustained improvements in reported headline macro variables, but we believe persistent delays in the completion of the sovereign debt restructuring exercise could impede the progress made thus far.
People’s Bank at ‘A(lka)’; Outlook stable
Fitch Ratings has affirmed the National Long-Term Rating on People’s Bank (Sri Lanka) (PB) at ‘A(lka)’. The Outlook is Stable. PB’s National Long-Term Rating is driven by its intrinsic financial strength and is highly influenced by the bank’s large exposure to the Sri Lankan sovereign’s weak credit profile (Long-Term Foreign-Currency Issuer Default Rating: RD) and the ongoing sovereign debt restructuring, which has exerted pressure on PB’s financial profile, particularly capitalisation and funding. It also reflects the bank’s strong domestic franchise as Sri Lanka’s second-largest bank.
Restructuring Delays Hinder Progress: Sri Lankan banks’ operating environment (OE) continues to show signs of stabilisation, supporting the recovery in banks’ operational flexibility. There are sustained improvements in reported headline macro variables, but persistent delays in the completion of the sovereign debt restructuring exercise could impede the progress made thus far, in Fitch’s view.
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