Steady Ship

Chandi Dharmaratne

May 22, 2012 (LBO) – Sri Lanka’s Hatton National Bank PLC retained its AA-(lka) rating from Ftich Ratings, but the risk evaluator warned the bank’s ratings was constrained by exposure to weak lending to the Maldives. One of Sri Lanka’s biggest privately-held banks, HNB retained its stable outlook, while Fitch also affirmed the lender’s sub-ordinated debentures at A+(lka).

The ratings are, however, constrained by the bank’s exposure to weak credits in Maldives, lower loan loss reserve coverage and a rising loan/deposit ratio, Fitch said Tuesday.

Sustained improvement of these three factors would lead to a rating upgrade. Conversely, a sustained deterioration in HNB’s capitalisation and asset quality relative to ‘AA(lka)’ peers would result in a rating downgrade, the risk evaluator said.

See full statement:

Fitch Ratings Lanka has affirmed Hatton National Bank PLC’s (HNB) National Long-Term rating at ‘AA-(lka)’. The Outlook is Stable.

The agency has also affirmed HNB’s subordinated debentures at ‘A+(lka)’.

The ratings reflect HNB’s sound financial profile, supported by its strong capitalisation levels, asset quality and profitability among local commercial banks.