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Citibank, N.A became the first bank in Sri Lanka to receive the SL 'AAA' rating which is the highest rating given by Fitch Ratings Lanka in recognition of the bank's lowest expectation of credit risk. The SL 'AAA" rating is assigned only in cases that have a high likelihood that financial commitments of an organization are paid when expected and also when scheduled.

As such with the SL 'AAA' rating, Citibank N. A. Sri Lanka would gain repute as being resilient to negative environmental effects, making it the most sound financial entity in Sri Lanka.

The rating was announced yesterday by Kapila Jayawardena, Chief Executive Officer/Country Head of Citibank in Sri Lanka and Ravi Abeysuriya, Chief Executive Officer/Managing Director of Fitch Ratings Lanka.

The SL 'AAA' rating is a prestigious certification which gives a substantial level of security to investors. This rating gives investors a ranking on parity with other investment instruments available in the market place, which have already been rated. Citibank's SL 'AAA' rating offers higher safety of timely payment of interest and principal, Abeysuriya said.

The Government in the 2003 budget announced that credit rating and publication of such rating will be made mandatory for all deposit taking institutions and all debt issues over Rs. 100 million for the public to find out the default risks of their investments. Credit ratings would not only instill a greater degree of market discipline on financial institutions but also help bring down the lending rates in general through disintermediation.

Another benefit of Fitch Ratings is that there is a lower cost for funding as instruments can be sold directly to investors. The need to guarantee investments through financial institutions only applies if long and short-term ratings are speculative grade. Ratings also help savers and investors to find out the true credit risk of any fixed income investment prior to investing their hard-earned money.

The Fitch Ratings are based on wide research that goes beyond the typical quantitative analysis realm of profitability ratios, earnings measures and cash flows. There are also qualitative analysis such as the industry risk level; the operating environment in a social, demographic, regulatory and technological changes context; the management focus in relation to corporate strategy, risk tolerance and funding policies.

Accounting policies are also evaluated to judge the aggressiveness of the accounting practices and restate figures, where necessary, to make the company's financials comparable with those of its peers.

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