Fitch revises Sri Lanka’s banking sector outlook to negative given COVID-19 impact

Fitch Ratings has revised Sri Lanka's banking sector outlook for 2020 to negative as the coronavirus pandemic poses increased risks to the anticipated expansion in the economy and credit demand, which will adversely affect the performance of banks.

Operating conditions are more challenging, affecting asset quality and profitability recovery. This will add to rating pressure as the rating outlook for the Sri Lankan banking sector is already negative following the revision in Sri Lanka's sovereign rating outlook to negative in December 2019.

Fitch expects to perform a complete review of all ratings assigned to Sri Lankan banks in the near term, which will include an assessment of the likely impact.