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May 24, 2012 (LBO)- Fitch Ratings agency on Thursday cut Sri Lanka’s National Development Bank’s credit outlook to negative, from stable, but its underlying rating was confirmed at ‘AA(lka)’. NDB’s subordinated debentures were also confirmed at ‘AA-(lka)’.

Fitch said the cut reflects NDB’s increased risk profile in terms of its decreasing capitalisation alongside aggressive loan expansion and potential pressure on its asset quality and profitability through portfolio seasoning and higher credit costs.

A sustained deterioration of NDB’s profile in terms of these credit metrics could result in a rating downgrade, while its ability to stem such deterioration could revise the outlook back to stable, Fitch said.

Notwithstanding the deterioration, the ratings continue to reflect NDB’s strong credit metrics in terms of its capitalisation, asset quality, and profitability.

Full statement below:

Fitch Revises National Development Bank’s Outlook to Negative; Affirms at ‘AA(lka)’

Fitch Ratings-Colombo/Mumbai/Singapore-24 May 2012: Fitch Ratings has revised National Development Bank PLC’s (NDB) Outlook to Negative from Stable. Its National Long-Term rating has b