Credit Rating

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Fitch Affirms Hatton National Bank at 'AA-(lka)'; Outlook Stable

Fitch Ratings Report - August 2017

Fitch's outlook on Sri Lankan banks for 2017 remains negative, although the expected deterioration in the operating environment has so far been managed. The slow economic growth, deteriorating asset quality and weak internal capital generation could put further pressure on banks' capitalisation. The operating environment is a key rating driver for the banking sector as it can affect the banks’ financial profiles.
Rating sensitivities- national long-term rating and senior debt

Fitch views the upside potential of HNB's ratings as limited given its higher risk appetite, which has led to weaker through-the-cycle asset quality compared with peers'. A material increase in risk taking, unless sufficiently mitigated through capital and financial performance, could result in a rating downgrade.

The ratings of senior and subordinated debt are primarily sensitive to changes in HNB's National Long-Term Rating.

Analysts:
Jeewanthi Malagala, CFA
+9411 2541900
jeewanthi.malagala@fitchratings.com

Rukshana Thalgodapitiya, CFA
+9411 2541900
rukshana.thalgodapitiya@fitchratings.com