January 23, Colombo (LNW): Fitch Ratings has recently revised the National Long-Term Ratings of ten major Sri Lankan banks, reflecting the positive shift in the nation’s financial outlook following the recent upgrade of Sri Lanka’s sovereign rating.
The move comes after the global credit rating agency recalibrated its national rating scale, which now reflects the enhanced creditworthiness of local issuers.
The adjustments, which took place following the upgrade of Sri Lanka’s Long-Term Local-Currency Issuer Default Rating (IDR) from ‘CCC-’ to ‘CCC+’ on December 20, 2024, have led to significant improvements in the ratings of several prominent banks.
However, Fitch has also affirmed the National Long-Term Ratings of five other banks, which remain unchanged.
Fitch’s recalibration process aims to provide a more accurate risk assessment for investors operating in the Sri Lankan market, helping to distinguish between the relative credit risks of local entities.
As part of this recalibration, the National Long-Term Ratings of the banks have been adjusted, with some enjoying an upgrade to reflect the positive shift in the country’s financial standing.
Among the banks that saw their ratings improve are several of Sri Lanka’s largest financial institutions, which have seen their National Long-Term Ratings raised to ‘AA-(lka)’ from ‘A(lka)’.
These include Bank of Ceylon (BOC), People’s Bank, Commercial Bank of Ceylon, Hatton National Bank (HNB), and Sampath Bank.
Meanwhile, Seylan Bank has received an upgrade to ‘A+(lka)’ from ‘A-(lka)’, and DFCC Bank, National Development Bank (NDB), Nations Trust Bank (NTB), and Pan Asia Banking Corporation (PABC) also experienced upward adjustments in their ratings.
The recalibration also saw some banks maintaining their existing ratings, with no change in outlook, as Fitch affirmed the National Long-Term Ratings of Amana Bank, Union Bank of Colombo, SANASA Development Bank, Housing Development Finance Corporation Bank, and Cargills Bank.
In line with the recalibration, the Outlooks for all the banks have been set as Stable, reflecting the general improvement in the financial environment post-sovereign upgrade.
However, Fitch has made it clear that it will not assign an Outlook to sovereign ratings below ‘CCC+’, as such ratings are typically too uncertain for meaningful projections.
