Nov 11, 2010 (LBO) – RAM Ratings Lanka has assigned long- and short-term ratings of AAA and P1 to Sri Lanka’s state-owned People’s Bank (PB) with a stable outlook, a statement said. “PB’s investment portfolio is deemed to be of low risk as it is dominated by government securities, which constituted 99.34 percent of its total investments as at end-FY December 2009.”
RAM Ratings said the bank’s performance is supported by its net interest margins (NIMs) of 5.48 percent as at end-FY December 2009, wider than those of its industry peers.
“This is mainly due to the bank’s focus on the high-yielding pawning segment, coupled with its low-cost deposit base.”
But the rating agency said PB’s performance had been hampered by hefty overheads arising from its branch network and inflated workforce.
Deposits dominated PB’s funding structure with a 94.22 percent share or 396.46 billion rupees.
“The bank’s extensive branch network and the credibility associated with state ownership have enabled it to chart strong growth in its deposit base.” “The ratings are premised on the bank’s state ownership and systemic importance as Sri Lanka’s second-largest licensed