Fitch Ratings (Lanka) Limited has affirmed the National Long-Term Rating of Sampath Bank PLC at ‘AA-(lka)’. The Outlook is Stable.
Sampath’s reflects its weakened asset quality, which offsets benefits from the bank’s improved capitalisation and moderate domestic franchise. Sampath is Sri Lanka’s fifth-largest commercial bank, with about 8% of system assets and 8% of system deposits at end-March 2020.
Fitch expects the performance of Sri Lankan banks, including Sampath, to come under stress from the increasingly challenging operating environment. We forecast Sri Lanka’s GDP to contract by 1.3% in 2020. Key credit metrics are likely to continue weakening, consistent with our previous expectation, despite regulatory relief. “We expect Sampath’s asset quality to deteriorate further as the coronavirus pandemic exacerbates the already weak operating environment. In addition, its high share of rescheduled loans and moderate loan-book concentration suggest that the deterioration could be sharper should the economic fallout be severe and linger”.
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