Sri Lanka’s Commercial Bank rejected the recent ratings revision by Fitch Ratings which downgraded the Bank’s Outlook to Negative from Stable on the National Long-Term Ratings.
Fitch Ratings Lanka Limited has affirmed the National Long Term Rating of the Bank at AA (lka) whilst revising its outlook from stable to negative citing a negative outlook revision of the Sri Lankan sovereign and the consequential deterioration of the operating environment and related risks.
In a stock market disclosure, the Combank said it is of the opinion that the revision in its rating outlook is not justified, since the Bank has sufficient safeguards in terms of its business model and sufficient capital buffers are in place to deal with any general deterioration in its operating environment of the nature described in the Rating Report which is evidenced by the Bank’s consistent and robust performance in the past.
The Fitch Ratings in its review said the Combank’s National Long-Term Rating is driven by its intrinsic financial strength and is highly influenced by their view of its operating environment.
“It also reflects its established domestic franchise as Sri Lanka’s third-largest bank, broadly stable earnings performance and established domestic-deposit franchise (11.6% share of banking-sector deposits at end-9M19), which underpins its funding and liquidity profile. The Negative Outlook reflects our assessment of the sovereign’s credit profile, which could constrain the bank’s rating upon a further deterioration in the operating environment.”
“An increase in operating-environment related risks or deterioration in capital buffers could pressure CB’s rating. Upside for the rating is constrained by the sovereign rating and our assessment of the operating environment,” the global rating agency said.
