RAM Ratings Lanka reaffirms rating for StanChart local branch
View(s):RAM Ratings Lanka has reaffirmed the respective long-and short-term financial institution ratings of Standard Chartered Bank – Sri Lanka Branch (SCBSL) at AAA and P1.
“The ratings are firmly anchored by the credit profile of Standard Chartered Bank PLC of the UK, the parent bank,” RAM said.
SCBSL is currently the second-largest foreign bank in Sri Lanka, with an asset base of Rs 84.90 billion as at end-December 2011.
Despite SCBSL’s miniscule contribution to the group (pre-tax contribution of less than 1%), past instances attest to the fact that support will be forthcoming from SCB-UK, should the need arise. As a branch of SCB-UK, the bank’s liabilities are also that of SCB-UK.
On the derivates deal that SCBSL and a few other banks had entered into with state-owned Ceylon Petroleum Corporation, SCBSL has obtained judgment in its favour although this still remains subject to legal proceedings, RAM said.
Amid this legal tussle, the bank’s loan growth was relatively flat last year. In contrast, in 1Q FY Dec 2012, its credit assets grew 28.23% (annualised) to Rs 51.03 billion as the management resumed lending to deter declining performance. Also SCBSL’s gross NPL coverage remained strong at 104.98% as at end-December 2011 (end-December 2010: 114.98%). “The bank also follows a prudent investment strategy, with its investment portfolio comprising mainly government securities,” RAM said.
(JH)
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