Announcing its rating decision on 16 July 2021, Fitch Ratings (Lanka) has affirmed the National Long-Term Rating of Bank of Ceylon (BOC) at AA-(lka). Fitch Ratings announced that the bank’s standalone strength and its entrenched domestic franchise are the key drivers of its rating outcome. The bank’s action on raising additional Tier I capital through issuing perpetual unlisted bonds in the year 2020 and 2021 and retaining more of its profits via dividend payout management, also positively impacted this rating outcome. Improvement of the bank’s Tier I capital base is commendable at this challenging operating environment, when the bank’s inherent limitations to raise capital as a fully state-owned entity is taken into consideration. All of its subordinated, unlisted, perpetual Tier I qualified bond issues which took place in the year 2020 and 2021 were oversubscribed, further affirming the strong investor confidence placed in the bank. Also, this rating is constrained by the Fitch assessment of Sri Lanka’s sovereign rating and the operating environment and therefore, it is the highest National-Long-Term rating a local bank could get in this environment. Having significant foreign currency exposure, the bank is also rated for its Long-Term Foreign and Local Currency Issuer Default Rating (IDR) by Fitch Ratings and the bank has been able to get its IDR rating also affirmed at “CCC” despite the prevailing challenging operating environment. The bank’s significant exposure to the sovereign and also its non-state exposure, which is also susceptible to deteriorating operating conditions, has been considered in announcing the IDR of the bank. Pandemic-related issues have demanded the bank be the state sector banking giant to lead an increased role in intermediating relief to businesses and individuals affected by the pandemic. It is also believed that the situation will ease in the short to mid term along with the successful rollout of the vaccination drive, which has now been accelerated. Further, due to the consolidated effort by all line agencies to eradicate Covid-19 spread within the country, a quicker economic recovery could be anticipated optimistically. Although the heightened challenges posed by the expected rise in impairment loans are being predicted and have influenced this rating outcome, the bank believes its consolidated and well-structured recovery plans will work out in easing the expected impairment risk. The bank also cemented its leading position in channelling inward remittances to the country and therefore has been able to further maintain its foreign currency liquidity at a satisfactory level. The bank has been able to record the highest profit in the industry according to the interim financials published as at 31 March 2021. The bank reported Rs. 14.8 billion profit before tax (PBT) by reporting a growth rate of more than 100% in comparison to the corresponding period of the previous year demonstrating its strength, agility, and strategic approach in facing challenges caused by the low interest rate scenario, higher non-performing advances (NPA), and operational restrictions stemming from a Covid-hit economy. Since the country is much more ready to face the pandemic with minimal disruption to economic activities by now, BOC Chairman Kanchana Ratwatte stated: “We are optimistic and look forward earnestly to seeing more promising results for the year 2021 and we believe it will further improve our regulatory ratios and our bottom line.” BOC General Manager Gunasekera, also expressing his views, stated: “We are confident that our timely strategies will allow us to navigate this challenging period and we will be able to achieve more in the coming months without compromising our efforts towards helping economic recovery.”