Seylan Bank’s non-performing loans (NPLs) grew sizably after its balance sheet was substantially cleaned in the first half of 2009, according to international credit rating agency Capital Intelligence (CI). In a press release, the agency reduced the bank’s financial strength rating to B- from B+ to reflect the Bank’s overall weak profitability and asset quality although the outlook for the financial strength rating is Stable. CI also announced that it affirmed Seylan Bank’s foreign currency rating at B- long-term and B short-term with a stable outlook in view of the support received from the Central Bank when there was a run on the bank’s deposits towards end 2008.
CI said new strategies are being formulated and the bank is being restructured with the help of external consultants. Seylan Bank’s profitability ratios, which have historically been weak, deteriorated further in the first half of 2009, partly due to the lower average volumes of loans resulting in a sharp drop in net interest income. Non-interest revenue also fell.
However on the plus side, CI stated that cost control measures have reduced operating expenses.
The Bank’s liquidity improved at end June 2009 and there have been further improvements in the Bank’s financial profile in more recent months due to increases in customer deposits and capital.
Seylan Bank’s management was taken over by the Central Bank earlier this year ahead of a possible run on the deposits due to the crisis at the Ceylinco Group which then owned the bank. |
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