Pan Asia Bank’s National LT rating upgraded
Fitch Ratings Lanka has upgraded the outlook on Pan Asia Banking
Corporation Plc’s (PABC) National Long-Term rating to Positive from
Stable. The agency has simultaneously affirmed Pan Asia Bank’s National
Long-Term Rating at ‘BBB(lka)’.
The revision of the outlook reflects the ongoing structural
improvements that have taken place since 2009 that in Fitch’s view have
supported the shifting of Pan Asia Bank’s credit metrics closer to
higher rated peers. The rating also reflects Pan Asia Bank’s small but
expanding franchise in terms of its market share of banking sector
assets, loans and deposits, higher net NPL/equity and developing funding
profile.
Pan Asia Bank’s demonstrated ability to sustain its financial profile
relative to higher rated peers, through for instance better managing a
likely deterioration in its credit metrics through a challenging
economic cycle, could result in an upgrade of its ratings.
Fitch expects Pan Asia Bank’s pace of lending to be capped to a
maximum of 18 % or 23 % in 2012 due to the regulatory credit ceiling –
the latter threshold being subject to management securing offshore
funding. Pan Asia Bank’s gross NPL ratios (3.3 % at H112) improved
closer to those of higher rated peers, reflecting the results of credit
controls instituted and a better credit environment, and continued to
benefit from its significant exposure to gold-backed loans (20 % at end
-2011) that accrue minimum NPLs.
Pan Asia Bank's share of current and savings accounts (CASA) in the
deposit mix of 22 % remained close to other mid-sized commercial bank
peers in the process of expanding their franchises. Deposits remain the
main source of funding. Loans/deposits continued to remain high at 97.5
% at H112 but could decrease alongside an increase in its deposit base
supported through branch expansion.
Pan Asia Bank is Licensed Commercial Bank that accounts for 1.1 % of
banking sector assets at end-2011. Its major shareholder is K.D.D.
Perera. Pan Asia Bank has been increasing its branch presence, operating
through 73 branches at end –September 2012.
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