Fitch Ratings has affirmed Cargills Bank Limited’s (CBL) National Long-Term Rating at ‘A+(lka)’. The Outlook is Stable.
CBL’s rating reflects Fitch’s expectation of support from its ultimate parent, CT Holdings PLC (CTH), a large local conglomerate with businesses in retail and wholesale distribution, fast-moving consumer goods and real estate.
“Our assessment takes into account operational integration, evident from the use of the group’s leading supermarket chain - Cargills Food City - to expand the bank’s operations, their shared brand name and capital infusions including LKR5.8 billion by the group in 2016, which exceeded the amount based on the parent’s stake in the bank. However, we believe support from the parent could be constrained by the bank’s large size, as its assets represent 173% of group equity.”
“Furthermore, the regulator has restricted the parent’s voting rights to 30% despite its majority 53% effective stake in CBL. The group’s leading supermarket chain helps the bank through the strong ‘Cargills’ brand and group synergy, with the latter likely to improve over the long term.”
Amana Bank at ‘BB+(lka)’; Outlook Stable
Fitch Ratings has affirmed Amana Bank PLC’s National Long-Term Rating at ‘BB+(lka)’. The Outlook is Stable.
Amana’s National Long-Term Rating, which is driven by its intrinsic financial strength, reflects its small and developing franchise, and its high-risk appetite stemming from its predominant exposure to retail and SME customers, which are more susceptible to deteriorating economic conditions.
The operating environment in Sri Lanka remains challenging and has a high influence on the bank’s rating as well as its key credit profiles.
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