Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's affirms ratings of three Sri Lankan banks; maintains negative outlook

13 Dec 2017

NOTE: On January 25, 2018, the press release was corrected as follows: In the list of affected ratings and assessments, added ‘Short-term local currency and foreign currency deposit ratings affirmed at NP’ under Bank of Ceylon, Sampath Bank PLC and Hatton National Bank Ltd. Revised release follows.

Singapore, December 13, 2017 -- Moody's Investors Service has affirmed the long-term ratings of three banks in Sri Lanka (B1 negative).

The rating actions follow the affirmation of Sri Lanka's B1 sovereign rating.

The affected banks are: (1) Bank of Ceylon; (2) Hatton National Bank Ltd.; and (3) Sampath Bank PLC. The baseline credit assessments (BCAs) and Adjusted BCAs of the three banks were affirmed at b1. The counterparty risk assessments (CRAs) of the three banks were affirmed at Ba3(cr)/NP(cr).

The outlook on the ratings of the three banks, where applicable, are maintained at negative.

Operating conditions for Sri Lanka's banks have weakened because of the high loan growth over the last two years, driven by a loosening of underwriting standards. As a result, Moody's has changed Sri Lanka's Macro Profile to "Weak +" from "Moderate -", and considered the new Macro Profile in the affirmation of the three Sri Lankan banks.

The full list of ratings and assessments affected by this rating action can be found at the end of this press release.

RATINGS RATIONALE

The affirmation of the three banks ratings and the maintained negative outlooks follow Moody's affirmation of Sri Lanka's B1 sovereign rating with a negative outlook on 12 December 2017.

The ratings and outlooks of banks typically follow the ratings and outlooks of their respective governments if the banks' ratings are positioned at the same level as the sovereign rating, which is the case for Bank of Ceylon, Hatton National Bank Ltd. and Sampath Bank PLC.

Typically, such linkages between the sovereign credit profile and the credit metrics of the domestic banks are driven by the banks' large investments in sovereign bonds, as well as by common drivers of the underlying operating conditions.

The key factor driving the negative outlook on Sri Lanka's sovereign rating is Moody's view that persistently high government liquidity and external vulnerability risks continue to pressure Sri Lanka's credit profile. Specifically, measures to build reserves and smooth the profile of external payments may be insufficient to stem imminent government liquidity and balance of payments pressures starting in 2019, when large international debt repayments come due and Sri Lanka's three-year International Monetary Fund (IMF) Extended Fund Facility (EFF) program concludes.

More details on the sovereign rating action are available at https://www.moodys.com/research/Moodys-affirms-Sri-Lankas-rating-at-B1-maintains-negative-outlook--PR_375798.

Moody's has also changed the Macro Profile for Sri Lanka to "Weak +" from "Moderate -", reflecting Moody's view that operating conditions have weakened for Sri Lankan banks. In particular, Moody's has adjusted downwards the credit conditions score by one notch to reflect rapid credit growth in Sri Lanka over the last three years to end June 2017, growing at a compounded annual growth rate (CAGR) of 21%.

Because Sri Lanka is an underpenetrated banking market, strong credit growth in itself is not necessarily a cause for concern. However, the current episode of strong credit growth has come against a backdrop of moderating economic growth. Thus, the credit growth multiplier (credit growth/nominal GDP growth) has increased rapidly to around 2x over the three years to end 2016. The negative adjustment to credit conditions reflects Moody's concern that the divergence between credit growth and underlying economic conditions may be unsustainable.

The lowering of Sri Lanka's Macro Profile to "Weak +" from "Moderate -" has no impact on the BCAs of the three Sri Lankan banks.

RATIONALE BEHIND THE AFFIRMATION OF BANKS' BCAs, ADJUSTED BCAs, AND CRAs

Moody's has affirmed the b1 BCAs and b1 Adjusted BCAs of the three banks.

For Bank of Ceylon, its b1 BCA and adjusted BCA, as well as its B1/B2 local and foreign currency deposit ratings, were affirmed owing to the bank's broadly stable asset quality with a 3.3% problem loans ratio at the end of September 2017 (2016: 2.9%, 2015: 4.3%), as well as Moody's expectation that its profitability will remain stable. Moody's expects there could be some improvement in the bank's capital buffers as it prepares to comply with Basel III capital norms.

For Sampath Bank, its b1 BCA and adjusted BCA, as well as its B1/B2 local and foreign currency deposit ratings, were affirmed because of the bank's healthy asset quality and profitability metrics. The bank's problem loans ratio stood at 1.7% at the end of September 2017, broadly unchanged from 1.6% at year-end 2016. Return on average assets over the nine months ended 30 September 2017 was also stable at 1.6% from 1.6% at year-end 2016. The ratings were affirmed to also reflect its improving capital ratio following its recent rights issue. Finally, the BCA also captures the potential risk to the bank's asset quality on account of the very strong loan growth seen over the last three years. The bank's BCA of b1 is constrained by the Sri Lankan sovereign rating of B1.

For Hatton National Bank Ltd., its b1 BCA and adjusted BCA, as well as its B1/B2 local and foreign currency deposit ratings, were affirmed because of the bank's largely stable solvency and liquidity metrics. The bank posted a mild increase in its problem loans ratio to 2.6% of gross loans at the end of September 2017, from 1.8% at year-end 2016. However, this risk was balanced by the rights issue in the third quarter of 2017, when the bank attracted LKR14.5 billion in line with the July 2017 implementation of Basel III capital rules in Sri Lanka. Following the capital increase, its tangible common equity to adjusted risk weighted assets ratio improved to 13.7% in the third quarter of 2017, from 11.0% in the previous quarter.

The Counterparty Risk Assessments of the three banks were affirmed because of the affirmation of their Adjusted BCAs.

WHAT COULD MOVE THE RATING UP/DOWN

Given the negative sovereign outlook, there is no potential for an upward revision of the long-term credit ratings of the three Sri Lankan banks. This is because the banks' long-term ratings are positioned at the same level as Sri Lanka's sovereign B1 rating.

A downgrade of Sri Lanka's sovereign rating will result in a downgrade of the long-term credit ratings of the three Sri Lankan banks.

The BCAs of the three banks could be lowered if there is a material deterioration in solvency factors, such as asset quality, profitability and capital. Tighter liquidity and an increased reliance on market funding would also be negative for the BCAs.

LIST OF AFFECTED RATINGS AND ASSESSMENTS

Bank of Ceylon

• Long-term local currency deposit rating affirmed at B1.

• Long-term foreign currency deposit rating affirmed at B2.

• Long-term foreign currency issuer rating affirmed at B1.

• BCA and Adjusted BCA affirmed at b1

• Long-term/ short-term Counterparty Risk Assessments (CRA) affirmed at Ba3(cr)/NP(cr).

• Short-term local currency and foreign currency deposit ratings affirmed at NP.

• Outlook on all ratings, where applicable, are maintained at negative.

Sampath Bank PLC

• Long-term local currency deposit rating affirmed at B1.

• Long-term foreign currency deposit rating affirmed at B2.

• Long-term foreign currency issuer rating affirmed at B1.

• BCA and Adjusted BCA affirmed at b1

• Long-term/ short-term Counterparty Risk Assessments (CRA) affirmed at Ba3(cr)/NP(cr)

• Short-term local currency and foreign currency deposit ratings affirmed at NP.

• Outlook on all ratings, where applicable, are maintained at negative.

Hatton National Bank Ltd.

• Long-term local currency deposit rating affirmed at B1.

• Long-term foreign currency deposit rating affirmed at B2.

• BCA and Adjusted BCA affirmed at b1

• Long-term/ short-term Counterparty Risk Assessments (CRA) affirmed at Ba3(cr)/NP(cr)

• Long-term foreign currency issuer rating affirmed at B1

• Short-term local currency and foreign currency deposit ratings affirmed at NP.

• Outlook on all ratings, where applicable, are maintained at negative.

Bank of Ceylon, headquartered in Colombo, reported total assets of LKR1,932 billion at 30 September 2017.

Sampath Bank PLC, headquartered in Colombo, reported total assets of LKR782 billion at 30 September 2017.

Hatton National Bank Ltd., headquartered in Colombo, reported total assets of LKR1,004 billion at 30 September 2017.

The principal methodology used in these ratings was Banks published in September 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Srikanth Vadlamani
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Gene Fang
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com