Fitch affirms Citibank N.A. Colombo Branch at ‘AAA’; Outlook Stable

Fitch Ratings has affirmed Citibank N.A.Colombo Branch’s (CitiSL) National LongTerm Rating at ‘AAA(lka)’. The Outlook is Stable.

Key rating drivers

CitiSL’s rating is the highest on the National Rating scale and reflects the credit profile and financial strength of Citibank, N.A. (A+/Stable). Citibank, N.A.’s rating is higher than Sri Lanka’s LongTerm Local and Foreign Currency Issue Default Ratings of ‘B+/Negative’, and as a result CitiSL’s rating on the

National Rating scale is mapped to ‘AAA(lka)’.

The rating is linked with Citibank, N.A.’s Issuer Default Rating (IDR) because of CitiSL’s legal status as a branch of Citibank, N.A., which makes it a part of the same legal entity. Fitch believes that support from

Citibank, N.A. would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka.

CitiSL’s strategic objectives are aligned with those of Citigroup. The branch is integrated into global

operations through utilisation of common systems, such as group’s core banking and antimoney laundering systems, and through regular reporting, including periodic internal audits.

As a result of CitiSL’s stringent customer evaluation framework, its loan book is significantly

concentrated, with the five largest loans accounting for 54% of total lending at end1H16. Further, CitiSL

has consistently maintained sound asset quality with zero nonperforming loans since 2009.

The contribution of deposits to the bank’s funding mix has declined to 71% at end1H16 from 86% at end2015.

However, Fitch believes that CitiSL’s liquidity position is stable as the branch has access to intergroup funding, if needed. CitiSL’s Fitch Core Capital (FCC) ratio remains around 46.7% at end1Q16 and the branch’s FCC ratio is much higher than that of its domestic peers. 

CitiSL was established in 1979 and operates as a single branch in Sri Lanka. 

Rating sensitivities

A downgrade of CitiSL’s rating could result from Citibank, N.A.’s rating falling below Sri Lanka’s IDR,

although Fitch sees that as highly unlikely in the near to medium term. Significant changes to Fitch’s

expectation of support from CitiBank N. A. could also have a negative impact on the rating.