Rating Retained

Sept 03, 2009 (LBO) - Fitch Ratings has confirmed HSBC Sri Lanka's long term national Long-term rating at 'AAA(lka)' with a 'stable' outlook, on the strength of its parents 'AA/negative outlook' rating. HSBC Sri Lanka is a branch of Hongkong & Shanghai Banking Corporation Limited, Hong Kong's largest banking group and is wholly-owned by HSBC Holdings Plc.

HSBC's loan book contracted by 7 percent in the 6-months to June, after expanding 19.7 percent in 2008 (year ending 31 December 2008) with he majority of the increase coming from the corporate customer segment.

The corporate customer segment accounted for 61 percent of loans at end 2008 while the consumer and retail customer segment made up the balance.

Credit concentrations increased significantly at end 2008 resulting from exposure to large local corporate customers, Fitch said.

HSBC's asset quality remains relatively strong in a local context, but has come under pressure in the face of the unfavourable macroeconomic environment.

The gross non performing loan (NPL) ratio increased to 3.9 percent at end June from 2.8 percent at end 2008.

Fitch says it was mainly due to higher delinquencies across the consumer and ret

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