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Hatton National Bank, had its long-term national rating, down graded to SL A- by Fitch Ratings Lanka on Thursday.
This decision comes after HNB was put on a ratings watch in July, to allow Fitch to do a review on the banks capital.

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rnldblquote The rating reflects the banks weaker capital position, due to a relatively high level of non-performing loans, and the low provision cover against such loans, dblquote Fitch said in a statement. rn

rnHNB reported significantly higher NPLs as at Dec 2002, in comparison to 2001. rn

rnThe increase was largely due to more accurate classification by HNB, rather than new NPLs. rn

rnWhile this included the classification of a few large accounts, which the bank had not classified previously, but identified as weak by Fitch, it also included others not identified at that time. rn

rnHNB has stepped up provisioning over the last two years. rn

rnProvision charges consumed 61 percent and 42 percent of pre provisioning income during the financial year ended 2002

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