Fitch affirms HNB's National Rating

Fitch Ratings Lanka has affirmed Sri Lanka-based Hatton National Bank Plc's (HNB) National Long-term rating at 'AA-(lka)' reflecting its sustained profile in terms of its good profitability, asset quality and capitalization among local commercial banks. At the same time, Fitch has affirmed the bank's subordinated debentures at 'A+(lka)'. The Outlook remains Stable.

HNB's loan growth was nine percent in FY08, but declined by four percent in Q109 similar to its peers. The overall loan mix remained the same at FYE08. Credit concentrations remained high at FYE08, as the five-largest total exposures accounted for 10 percent of loans and 75 percent of equity, including related party exposures to the Stassens group at four percent of loans and 30 percent of equity. Subsequent to more stringent NPL classification after May 2008 for instalment loans, NPLs/Loans deteriorated to 8.3 percent at Q109 (FYE08: 6.8 percent).