ICRA Lanka Limited has reaffirmed the Issuer Rating of [SL]A+ with Stable outlook for MCB Bank’s Sri Lanka branch (MCBSL or the Bank).
The rating factors in the financial, managerial and operational support provided by MCB Bank Limited, Pakistan (MCBP; rated Caa1/NP by Moody’s) to its Sri Lankan branch operations.
The rating takes note of the comfortable capitalisation profile with a Tier 1 capital ratio of 33.97% in June-20 as compared to the regulatory requirement of 8.00%.
Further, the Bank’s core capital was LKR 6.2 Bn as in June-20 against the regulatory requirement of LKR 5 Bn. ICRA Lanka also takes note of the relatively better asset quality indicators with MCBSL reporting GNPA ratio of 4.47% as on June-20, as compared to the system’s GNPA ratio of 5.27%.
ICRA Lanka believes that MCBSL will continue to benefit from the support from MCBP.
The outlook may be revised to ‘Positive’ in case of a significant improvement in the resource and earnings profile as the portfolio expands while keeping the asset quality under control.
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