Fitch affirms Standard Chartered Sri Lanka branch at ‘AAA(lka)’

Fitch Ratings Lanka has affirmed Standard Chartered Bank, Sri Lanka Branch’s (SCBSL) National Long-Term Rating at ‘AAA(lka)’. The Outlook is Stable.

SCBSL’s rating reflects the credit profile and financial strength of Standard Chartered Bank.
The rating is linked with SCB’s IDR to reflect SCBSL’s legal status as a branch of SCB, which makes it part of the same legal entity. It also reflects the relatively small size of the branch (around 0.15 percent of the total assets of SCB at end-2016), and therefore any support would not be material to the  head office.

SCB’s rating is higher than Sri Lanka’s Long-Term Local- and Foreign-Currency IDRs of ‘B+’/Stable’; and as a result, SCBSL’s rating is at the highest end of the National Rating scale for Sri Lanka. Fitch believes that support from SCB would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka. SCBSL’s reported non-performing loan ratio continues to remain low compared to local peers despite the increase in the ratio to 0.8 percent at end-June 2017 from 0.3 percent at end-2015.

Fitch expects the branch to maintain sufficient capitalisation to support its business plans despite regular profit repatriations. SCBSL’s Fitch Core Capital ratio improved to 21.0 percent at end June 2017 from 19.9 percent at end-2016 supported by internal capital generation.