Sept 03, 2009 (LBO) – Sri Lanka’s Fitch Ratings has confirmed the ‘AAA(lka)’ rating of state-run National Savings Bank (NSB), with a ‘stable’ outlook. “The rating reflects NSB’s state ownership, systemic importance, the low risk nature of most of its asset base and explicit guarantee from the Government of Sri Lanka on its deposits,” Fitch Ratings said.
NSB is bound by the NSB Act No 30 of 1971 to invest a minimum of 60 percent of its deposits in government issued/guaranteed securities.
At the end of the 2008 financial year exposure to government securities was 75 percent of deposits (76 percent in 2007).
Total government exposure (tradable securities and direct loans to the state and state owned entities) accounted for 67 percent of assets at 2008 (67 percent in 2007). T
Government securities are primarily held to maturity (in the first half of 2009 portfolio bond duration was approximately 1.7).
Given the government securities it holds, NSB enjoys strong liquidity (in the first half of 2009 statutory liquidity ratio: 70.4 percent), but will continue to face significant interest rate risks due to maturity mismatches inhere