Fitch downgrades Lankan financial institutions on Sovereign downgrade

Fitch Ratings has downgraded the Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of the following Sri Lanka-based financial institutions following the downgrade of Sri Lanka’s sovereign rating:

- National Savings Bank (NSB) to ‘B’ from ‘B +’; Outlook Stable

- Bank of Ceylon (BOC) to ‘B’ from ‘B +’; Outlook Stable

- DFCC Bank PLC (DFCC) to ‘B’ from ‘B +’; Outlook Stable

- People’s Leasing and Finance PLC’s (PLC) to ‘B-’ from ‘B’; Outlook Stable

The Stable Outlook on NSB, BOC, and PLC reflects the Stable Outlook on the sovereign.

Fitch has also downgraded the Viability Ratings (VR) of BOC and DFCC to ‘B’ from ‘B+’ to reflect the more challenging operating environment in Sri Lanka.

Fitch has revised the assessment of the operating environment in Sri Lanka to ‘B/Stable’ from ‘B+/Negative’ to reflect the likely adverse impact on the banks’ credit profiles following the deterioration in the Sri Lankan sovereign’s credit profile amid difficult domestic and external conditions. The National Ratings of BOC, NSB, DFCC, and PLC were not covered in this review.

On Monday, Fitch downgraded the Sri Lankan sovereign to ‘B’ from ‘B+.’