Fitch affirms NSB at 'AAA(lka)'

Fitch Ratings Lanka has affirmed National Savings Bank's (NSB) National Long-term rating at 'AAA(lka)'. The outlook is stable.

NSB's rating reflects its state ownership and systemic importance to the state in mobilising retail savings and investment of such savings in government securities (G'secs). NSB's G'secs holding accounted for approximately 39 percent of the banking systems exposure to G'Secs at FYE09 (46 percent at FYE08), indicating NSB's significance to the government. In addition, NSB's deposits have an explicit guarantee from the Government of Sri Lanka (95 percent of borrowings at H110).

NSB is bound by the NSB Act No. 30 of 1971 to invest a minimum of 60 percent of its deposits in government issued and guaranteed securities. Total government exposure (tradable securities and direct loans to the state and state-owned entities) accounted for 70 percent of NSB's assets in H110 (FYE09: 74 percent, FYE08: 69 percent).