Fitch assigns 'A+(lka)' to Sampath Bank's 2007/2012 Subordinated Debt

RATING: Fitch Ratings Lanka assigned a National rating of 'A+(lka)' to Sampath Bank Limited's (Sampath) 2007/2012 unsecured subordinated redeemable debentures of upto Rs. 1.5 billion.

The agency has affirmed Sampath's National Long-term rating at 'AA-(lka)' (AA minus (lka)), as well as the 'A+(lka)' National ratings assigned to the bank's 2004/09 and 2006/2011 subordinated debentures.

The outlook on the ratings is stable.

The ratings reflect the bank's consistent profitability, stable asset quality and relatively good solvency. However, the ratings also factor in the relatively moderate level of capitalisation.

Pre-tax return on assets (ROA) increased to 3.0% in FY06, from 2.2% in FY05. However post-tax ROA slipped marginally to 1.1% in FY06 from 1.2% in FY05, due to high effective taxation. Profitability was aided by a 55.9% growth in non-interest income (largely accounted for by foreign exchange profits) which compensated for the decline in net interest margins to 4.6% in FY06 from 4.8% in FY05.