Sri Lanka's top private bank Commercial Bank (CB) will continue to hold its "AA(lka)" national long term rating, with stable outlook, which was previously assigned to it by Fitch Ratings. In addition, a rating of "AA-(lka)" for CB's subordinated debentures has also been maintained.
According to Fitch's Rating Action & Commentary (RAC), "CB's ratings reflect its solid domestic franchise, sound profitability and its strong capital position. Fitch notes that the bank has arrested the decline in its asset quality resulting in a marked improvement in its gross non-performing loans (NPL) and net NPL/ equity ratios. However, a reversal of asset quality trends or a deterioration in capitalisation could exert pressure on CB's ratings."
Also stated, "CB continued to report strong core profitability as measured by pre-tax return on assets (adjusted for gains or losses on equities and government securities in 2009 and 2010 and loss on oil hedging transactions in 2009). It was above that of most of its peers', increasing to 3.3% in 2010 from 3.0% in 2009, supported largely by an expansion in its net interest margins and low cost structures. The bank's capitalisation in terms of equity/assets increased to 9.1% at end-2010 before dipping to 8.8% in Q111 (the quarter ended 31 March 2011) as asset growth outpaced equity accretion."
Fitch also suggested that it "expects adequate capitalisation to be maintained through sound internal accretion and planned capital infusions such as the upcoming rights issue." |
E-mail
