|Thursday, 30 September 2004|
AA(sri) Credit rating for NDB
Fitch Ratings Lanka Ltd (FRL) has assigned a AA(sri) (Double A) national long rating for the Implied Long-term unsecured Senior Debt of National Development Bank (NDB) and AA-(sri) (Double AA minus) for the subordinated unsecured debt of NDB.
AA (sri) rating indicates that there is a very low expectation of credit risk. It indicates very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
NDB's rating reflects its long and sound operating history, strong capital base and a prudent and competent management team. The bank has maintained a consistent track record of profitability enabling the build up of equity. ROA over the last three years averaged a healthy 2.0% and ranks high among the larger financial institutions. At present NDB enjoys a high capital/assets ratio among the larger banks in Sri Lanka.
The last few years has seen management focus on business strategies and processes improvements. Operating procedures have been refined, particularly in the area of risk management, which at present is above average in the local context. Increased provisioning and recoveries have significantly improved asset quality.
However, the rating also recognises the high exposure to project financing at present, despite the acquisition of NDB Bank in 2004.
Going forward NDB Bank will enable NDB to reduce its dependence on project financing to some extent and also develop alternative funding sources.
Produced by Lake House