Oct 05, 2013 (LBO) – Fitch Ratings has confirmed an ‘A-(lka)’ rating by Seylan Bank Plc, with a ‘stable’ outlook. An upgrade of Seylan’s rating would be contingent upon its standalone rating moving above the support-driven rating, by way of significant and sustained improvement in asset quality and provisioning while maintaining other credit metrics in line with higher-rated peers.
“The bank’s standalone credit profile has improved significantly since 2009, although it is still weaker than the support-driven rating, stemming from its weak asset quality and weaker solvency ratio compared with its rating peers,” Fitch Ratings said.
“Seylan developed a strategic plan in 2012, which included process improvements, systems enhancements, structural changes and business rationalisation.
“The successful implementation of this plan could support the credit profile of the bank.”
Fitch said Seylan’s non-performing loans had improved to 11.15 percent at end-June 2013 from 14.24 percent at end-2011 but a slowing economy and rising NPLs across domestic banks could be a challenge to improve asset quality.