Standard Chartered Bank ‘AAA(lka)’ rating confirmed – Fitch

CEYLON TODAY | Published: 2:00 AM Apr 13 2021

Fitch Ratings has confirmed a ‘AAA(lka)’ rating of Sri Lanka’s Standard Chartered Bank branch amid a rise in bad loans but strong capitalization and support from the main Bank, which has a rating higher than the island’s sovereign rating.

The outlook is stable.

“SCB’s Long-Term Issuer Default Rating (IDR) is significantly higher than Sri Lanka’s Long-Term Local- and Foreign-Currency IDRs of ‘CCC’, and the support-driven credit profile of the branch is among the strongest in the universe of Sri Lanka’s rated entities,” Fitch said.

“As a result, SCBSL’s rating is at the highest end of the National Rating scale for Sri Lanka.”

“We expect SCBSL’s financial profile to remain better than local peers in the medium term, reflecting the bank’s healthy underwriting standards and risk controls, which are in line with SCB group practices.”

SCB Sri Lanka’s non-performing loans ratio increased to 2.7 per cent by the end of the third quarter of 2020, from 2.2 per cent at the end of 2019, driven mostly by retail loans.

The Bank’s common equity Tier 1 (CET1) ratio of 16.8 per cent at end-3Q20 was higher than the sector’s 13 per cent.

The full statement is given below:

Fitch Affirms Standard Chartered Bank, Sri Lanka Branch at ‘AAA(lka)’; Outlook Stable

Fitch Ratings – Colombo – 08 Apr 2021: Fitch Ratings Lanka has affirmed Standard Chartered Bank, Sri Lanka Branch’s (SCBSL) National Long-Term Rating at ‘AAA(lka)’. The Outlook is Stable. SCBSL’s rating is underpinned by Fitch’s expectation of a high probability of support from the head office of Standard Chartered Bank (SCB, A+/Negative/a), if required, subject to any regulatory constraints on remitting money into Sri Lanka.

This expectation is driven by SCBSL’s status as a branch of SCB, thereby a part of the same legal entity. SCB’s Long-Term Issuer Default Rating (IDR) is significantly higher than Sri Lanka’s Long-Term Local- and Foreign-Currency IDRs of ‘CCC’, and the support-driven credit profile of the branch is among the strongest in the universe of Sri Lanka’s rated entities. As a result, SCBSL’s rating is at the highest end of the National Rating scale for Sri Lanka.

CEYLON TODAY | Published: 2:00 AM Apr 13 2021

More News