Bank of Ceylon’s (BOC) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) have been upgraded to ‘CCC+’ from ‘CCC-’by Fitch Ratings (Fitch) in their latest rating review.
Further, the Viability Rating (VR) was also upgraded to ‘ccc+’ from ‘ccc-’ and affirmed Short-Term IDR at ‘C’. According to the latest announcement made by Fitch upgrading BOC’s international ratings, Fitch has considered the following factors in order to support their rating action. Fitch highlighted that the successful completion of debt restructuring has reduced sovereign-related stress on Sri Lankan banks’ operating environment and as well as on BOC’s overall credit profile.
In terms of the Bank’s risk profile, it is expected that the conclusion of sovereign debt restructuring and the Bank’s focus on expanding private-sector lending will moderate the exposure to the sovereign in the medium term. Fitch has further upgraded BOC’s business profile score considering the Bank’s continued strong market position as the largest bank in Sri Lanka and the potential to expand the business fostered by the improved operating environment.
Moreover, foreign currency funding and liquidity score of the Bank has upgraded reflecting the significant improvement in the liquidity profile and will be further strengthened with the restoration of the sovereign’s creditworthiness, subsequent to the successful debt restructuring and thereby providing the Bank, the access to foreign currency wholesale funding.
The asset-quality of the Bank will be further enhanced due to better economic conditions of the country and the potential capacity of the Bank to enrich its credit portfolio. Additionally, Fitch has noted that the reduced risk of sovereign default and the stabilizing economy alleviate solvency risk for BOC and thus, revised upward the Bank’s capitalization and leverage score.
As per the published financials for 3Q-2024, BOC has demonstrated an impressive financial performance, achieving a Profit Before Tax (PBT) of Rs. 37.6 billion with 66% YoY growth during the first nine months of 2024, illustrating the Bank’s resilience in a challenging economic environment.
Further, the Bank has recorded a robust financial position, with total Assets amounting to Rs. 4.6 trillion and total Deposits of Rs. 4 trillion. BOC being listed among the Top 1000 World Banks and awarded the prestigious ‘Bank of the Year – Sri Lanka’ award for 2024 by ‘The Banker Magazine’ are testimonial for its commitment to fortify financial stability and to energize economic growth
