Looking Good

Sampath Bank on Monday secured an A+ (sri) for its long-term debt and an A (sri) rating for its four-year debenture issue from Fitch Ratings.
An A+ (sri) rating denotes a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings, says Fitch. rn

rnSampaths rating reflects its higher profitability, relatively sound operating systems but also its moderate size, says Fitch.rn

rnHowever, the Bank stands out among its peers in terms of other indicators such as profitability and efficiency. Superior IT has been a competitive advantage of Sampath since its inception, and management continues to incorporate IT as an integral part of its business modelrn

rnThe Banks capital adequacy ratio has slipped to 11 percent as at Dec. 2003, largely due to full allocation of its capital against FCBU assets in 2003.rn

rnBut, Sampaths regulatory capital is only marginally above the minimum regulatory requirement of 10 percent, and therefore a fresh infusion maybe necessary to support future growth in loan book, says Fitch.rn

rnTo beef up its capital base, Sampath is raising Rs. 1.5 bn through a quoted debenture issue this month. The issue, which opens on May 27, will be quoted on the Colombo Stock Exchanges main board. rn

rnSampath Bank was established in 1987, and presently has a network of 64 branches and accounts for a market share of 5.7 percent of assets in the banking system. rn

rnLately Sampath, has placed greater emphasis on promoting the consumer segment, and has initiated several measures to expand its presence in home and personal loans, pawning, credit cards and leasing. rn

rnCurrently, the corporate segment accounts for around 50 percent its loan book, while the middle market and consumer segments account for an estimated 37 percent and 13 percent of loans respectively.rn

rnFitch Ratings Lanka Ltd is a joint venture between Fitch Ratings, USA, International Finance Corporation Washington, Central Bank of Sri Lanka and several other leading local financial institutions. rn

rnFitch Ratings, USA is one of the three global full service credit rating agencies and rates over 85 sovereign nations, 7,600 structured finance ratings, 2,900 international banks and financial institutions.

Fitch Ratings Inc. has over 90 years experience in credit analysis and a combined analytical and professional staff of more than 1,400 many of whom possess over 10 years of specialised industry experience.rn

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-LBO Newsdesk: LBOEmail@vanguardlanka.comrn

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