In their latest rating review carried out in September 2021, Fitch Ratings Sri Lanka has affirmed Amana Bank PLC’s National Long Term Rating at BB+ with a Stable Outlook, thereby maintaining the Bank’s rating profile which was upwardly revised in June 2020. This rating is affirmed despite the outlook on Sri Lanka’s operating environment assessment.
As per their communique, Fitch Ratings has commented that Amana Bank's National Long-Term Rating, which is driven by its intrinsic financial strength, is highly influenced by the challenging operating environment and its asset quality. The global rating agency communique adds that Amana 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 SME customers.
Fitch expects Amana 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 doubled or grew by 102% YoY to reach LKR 505.7 million from LKR 250.5 million recorded in H1 of 2020. The Bank recently announced its fourth consecutive dividend pay-out in the form of a scrip dividend, totalling over LKR 260 million and being 30% higher to the dividend paid in 2020.
According to Fitch, a rating upgrade for Amãna Bank can be favourable upon the enhancement of the Bank’s franchise together 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.
Commenting on the rating affirmation, Amãna Bank’s Chief Executive Officer, Mohamed Azmeer said “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 Amana Bank’s financial profile will only get better with time to come, thanks to strong acceptance of our people friendly banking model.”
Amana Bank PLC is a stand-alone institution licensed by the Central Bank of Sri Lanka and listed on the Colombo Stock Exchange with Jeddah based IsDB Group being the principal shareholder having a 29.97% shareholding of the Bank. The IsDB Group is a ‘AAA’ rated multilateral development financial institution with a membership of 57 countries. Amãna Bank does not have any subsidiaries, associates or affiliated institutions, other than its flagship CSR project the ‘OrphanCare’ Trust.