Oct 03, Colombo: Fitch Ratings Lanka has affirmed the National Long-Term Ratings on five small and mid-sized Sri Lankan banks.
The banks are: Nations Trust Bank PLC (NTB), Pan Asia Banking Corporation PLC (PABC), Union Bank of Colombo PLC (UB), SANASA Development Bank PLC (SDB) and Amana Bank PLC (Amana).
The affirmations follow Fitch's periodic review of small and mid-sized Sri Lanka banks and are driven by the banks' intrinsic profiles. Fitch expects the banks' capitalization to remain thin in the medium term, as they are likely to sustain a strong increase in loans. PABC, SDB and Amana infused capital to meet their respective minimum regulatory core capital levels. The impact of the implementation of SLFRS 9 in 2018 could also significantly reduce the banks' capital positions.
The banks' absolute non-performing loans (NPLs) increased in 1H17, in line with our expectations. Fitch believes asset-quality risks are greater for these banks due to their greater exposure to retail and SME customer segments, which we see as more susceptible to economic downturns.
Full statement by Fitch Rating can be accessed here.