S&P Global Ratings has revised its credit rating outlook for DFCC Bank from negative to stable, while affirming ‘B’ long-term and ‘B’ short-term issuer credit ratings on the bank. In its assessment of DFCC’s business position, the Bank is projected to maintain its satisfactory market position and business stability over the next 12-18 months. CEO, DFCC Bank, Lakshman Silva said, “We are pleased that S&P has recognised that DFCC Bank’s fundamentals keep improving with the deposit base increasing, loan to deposit ratio moving in the right direction and NP ratio within industry average. “The upward revision of the rating outlook fully justifies the decision of the Board taken last year to sacrifice short term profitability in exchange for long term stability,” he said.
The stable rating reflects the rating agency’s confidence in the financial institution’s ability to navigate operating conditions in Sri Lanka. At the same time, it has affirmed its ‘B’ long-term and ‘B’ short-term issuer credit ratings on DFCC Bank while affirming its senior unsecured debt ratings on the bank.
Further, the rating agency noted that an improvement in the bank’s risk position balances a decline in the bank’s risk-adjusted capital under its new updated methodology. DFCC’s credit costs are expected to increase somewhat in the next 12-18 months. However, S&P expects losses to remain well within its normalized loss expectations.