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| Sunday, 4 April 2004 |
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| News Business Features Editorial
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FRL affirms Triple A for NSB's long term unsecured senior debt Fitch Ratings Lanka (FRL) has affirmed the SL AAA (Triple A) national rating for the implied Long-term unsecured senior debt of National Savings Bank(NSB). SL AAA long-term rating denotes a very low expectation of credit risk. The rating indicates a very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. NSB's rating reflects the low credit risk nature of the banks activities, state ownership and the explicit state guarantee on deposits. NSB is the third largest bank in Sri Lanka in terms of assets, but commands a dominant position in the deposit mobilisation market. Consequently the bank exerts some influence as a 'price-setter' in deposit mobilisation. The majority of NSB assets (83%) are in government securities and loans secured on cash deposits, with wholesale lending and retail lending making up the remainder. The bank has been a vehicle to mobilise retail savings, which in turn was largely used to finance the government budget deficit. However, its survival over the longer term, as a viable institution, would necessitate widening its scope of activities. Going forward the key challenge for NSB would be to transform itself to engage in wider banking activities and build internal capacity to operate in a commercial manner. It would be particularly important to develop essential risk management skills, given its relatively high exposure to market risk. ie the high exposure to long duration treasury bonds and rupee loans with fixed interest rates. |
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| Editorial | Security Produced by Lake House |
