Fitch affirms BOC rating

Fitch Ratings Lanka said it has affirmed the national long-term rating and individual rating of Bank of Ceylon (BOC) at 'AA(lka)' and 'D/E' respectively, reflecting the bank's systemic importance as the largest bank in Sri Lanka with 18.2% of the banking system assets, its relatively stable financial profile, and state ownership.

It said it also affirmed its support rating at '4', reflecting the expected level of support from the government due to the bank's state ownership and its strategic importance to the country's economy. The outlook on the rating remains stable.

BOC is the main state commercial bank and one of the two commercial bankers to state-owned enterprises (SOE), extending direct credit, trade finance facilities and foreign currency funding through its large deposit base and cross-border borrowings. As a result, the bank's credit exposure to the state and SOEs was significantly high at 50.4% of gross loans at FYE06, and has since declined to 47.3% at Q107. Fitch expects this level of state exposure to remain at least at the current level due to state sector borrowing requirements.