Business

Fitch Ratings indicates Amãna Bank’s outlook is Stable 

Despite the outlook on Sri Lanka’s operating environment assessment, Fitch Ratings Sri Lanka affirmed that the Amãna Bank PLC’s national long-term rating indicated a Stable outlook with BB+ in the latest rating review that was carried out in September 2021. 

Fitch said that the bank has been able to maintain its rating profile which was upwardly revised in June 2020. 
Commenting on the rating affirmation, Amãna Bank’s CEO Mohamed Azmeer stated: “At a time when the operating environment continues to be challenged owing to the pandemic, we are humbled to note that Fitch Ratings has affirmed our national long-term rating at BB+ with a Stable outlook. This affirmation demonstrates Amãna Bank’s resilience and tenacity where it successfully overcame many challenges during the last two years. The bank also continues to maintain better asset quality through prudent portfolio management and customer engagement, thereby lowering its non-performing advances compared to the industry. I am confident that Amãna Bank’s financial profile will only get better with time to come, thanks to strong acceptance of our people-friendly banking model.” 

As per the global rating agency  communique, Fitch Ratings observed that Amãna Bank’s national long-term rating is driven by its intrinsic financial strength which is highly influenced by the challenging operating environment and its asset quality. The aforesaid communique adds that bank’s rating also compares its small and developing franchise against peers, and considers its high-risk appetite stemming from its large exposure to retail and small and medium enterprise (SME) customers. 

Fitch expects Amãna Bank’s financing portfolio, which is driven predominantly by the high yielding SME and retail segments, to grow higher than the sector in the medium-term, which will result in boosting the bank’s profitability. During the first half of 2021, the bank’s profit before tax (PBT) doubled or grew by 102% year-on-year (YoY) to reach Rs. 505.7 million from Rs. 250.5 million recorded in the first half of (H1) of 2020. The bank recently announced its fourth consecutive dividend pay-out in the form of a scrip dividend, totalling over Rs. 260 million and being 30% higher to the dividend paid in 2020. 

In accordance with Fitch, a rating upgrade for Amãna Bank can be favourable upon the enhancement of the bank’s franchise along with a sustained improvement in its financial profile leading to an improved intrinsic credit profile relative to the universe of Sri Lankan entities rated on the national rating scale. 

Amãna Bank PLC is a standalone institution licensed by the Central Bank of Sri Lanka (CBSL) and listed on the Colombo Stock Exchange (CSE) with Jeddah-based IsDB Group being the principal shareholder having a 29.97% shareholding of the bank.