Rating Report

Oct 05, 2013 (LBO) - Fitch Ratings has confirmed an 'A-(lka)' rating by Seylan Bank Plc, with a 'stable' outlook.

An upgrade of Seylan's rating would be contingent upon its standalone rating moving above the support-driven rating, by way of significant and sustained improvement in asset quality and provisioning while maintaining other credit metrics in line with higher-rated peers.

"The bank's standalone credit profile has improved significantly since 2009, although it is still weaker than the support-driven rating, stemming from its weak asset quality and weaker solvency ratio compared with its rating peers," Fitch Ratings said.

"Seylan developed a strategic plan in 2012, which included process improvements, systems enhancements, structural changes and business rationalisation.

"The successful implementation of this plan could support the credit profile of the bank.

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Fitch said Seylan's non-performing loans had improved to 11.15 percent at end-June 2013 from 14.

24 percent at end-2011 but a slowing economy and rising NPLs across domestic banks could be a challenge to improve asset quality.