Fitch affirms ComBank at ‘AA(lka)’

Fitch Ratings Lanka has affirmed Commercial Bank of Ceylon PLC’s (CB) national long-term rating at ‘AA(lka)’ with a stable outlook. The agency has also affirmed CB’s subordinated debentures at ‘AA-(lka)’.

CB’s ratings reflect its solid domestic franchise, sound profitability and its strong capital position. Fitch notes that the bank has arrested the decline in its asset quality resulting in a marked improvement in its gross non-performing loans (NPL) and net NPL to equity ratios. However, a reversal of asset quality trends or deterioration in capitalization could exert pressure on CB’s ratings.

CB’s loan book expanded by 25.4% yoy in 2010, after contracting by 4.5% yoy in 2009, reflecting the recovery in private sector credit demand supported by improved macroeconomic conditions.