ICRA Lanka Limited has reaffirmed the issuer rating of [SL] AAA (pronounced SL triple A) with Stable outlook for National Savings Bank (NSB or the Bank).
ICRA Lanka has also reaffirmed the issue rating of [SL]AAA (pronounced SL triple A) with stable outlook for the Rs 20,000 million senior, unlisted, unsecured, redeemable debenture programme and the issue rating of [SL]AA+ (pronounced SL double A plus) with Stable outlook for the Rs 6,000 million subordinated, unsecured, redeemable debenture programme of NSB.
The ratings take note of the 100% Government of Sri Lanka (GoSL) ownership, which provides a strong likelihood of sovereign support and, the 100% explicit guarantee provided by the Government of Sri Lanka (GoSL) for the moneys deposited with the Bank and the interest thereof through the National Savings Bank Act (NSB Act).
The ratings factor in the low-risk investment portfolio, healthy quality lending portfolio and the adequate capital profile.
The Bank’s investment portfolio is characterised by low risk, with NSB mandated to invest a minimum of 60% of the total deposits in government securities; as in March 2020, 61% of the deposits were in government securities.
The quality of the lending portfolio is driven by zero Gross NPAs reported on its exposure to GoSL, State-owned Entities (“SOE”) and Corporate segments which accounted for 36% of the lending portfolio in March 2020 and 2.52% gross NPA in the retail portfolio (64% of the lending portfolio) as of March 20 compared to 2.47% in March19.
NSB’s BASEL III complied total capital adequacy ratio (CAR) stood at 13.59% (Tier-I capital ratio at 11.37%) as compared to regulatory requirement of 12.00% (Tier-I capital ratio at 8.00%) as of March-2020. Further, in December-2019, CBSL reclassified NSB as a Non-Domestic-Systemically Important Bank (“Non -DSIB”) based on its new criteria for this assessment.
ICRA Lanka believes that NSB will continue to benefit from Government support considering its position as the largest licensed specialised bank in Sri Lanka, which also provides vital funding support to GoSL as per the NSB Act.
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