Fitch revises three Sri Lanka banks

Fitch Ratings said it downgraded National Development Bank plc's national long-term rating to A+(lka) from AA-(lka).

The agency also said it revised the outlook on DFCC Bank plc's and Sampath Bank plc's national long-term ratings to negative.

The actions follow a periodic review of the large banks peer group in Sri Lanka, Fitch said.

The agency said it downgraded its assessment of Sri Lankan banks' operating environment to B+ from BB- and assigned a negative outlook.

Fitch said it believes operating conditions have become more challenging as evidenced by the downgrade of the sovereign rating to B+ from BB- in February 2016.

The agency also said it expects increased volatility to add pressure on the banks' credit metrics.

Along with its national rating, the rating on National Development Bank’s Basel II compliant subordinated debentures also was downgraded to A(lka) from A+(lka).

The rating on DFCC Bank’s dollar-denominated senior unsecured notes was affirmed at B+ with recovery rating at RR4 and its Sri Lankan rupee-denominated senior unsecured debentures were affirmed at AA-(lka), along with its Basel II compliant Sri Lanka rupee-denominated subordinated debentures at A+(lka).

Sampath Bank’s national long-term rating also was affirmed at A+(lka) and Basel II compliant outstanding subordinated debentures at A(lka).

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