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S&P lowers outlook on 2 Sri Lankan banks to negative

S&P Global Ratings lowered its outlooks on Sri Lanka-based DFCC Bank Plc and National Savings Bank to negative from stable following a similar action on Sri Lanka's sovereign credit rating.

The rating agency said Jan. 14 that it also affirmed the B long-term and B short-term issuer credit ratings of both banks.

Ratings said it believes Sri Lankan financial institutions are unlikely to be immune to increasing credit pressures on the sovereign and the broader operating environment and the rating agency reflects such risks in its view that the economic risk trend and industry risk trend for Sri Lanka's banking sector has become negative.

The affirmation of DFCC Bank's ratings reflects Ratings' expectation that the bank's funding base will continue to strengthen despite heightened risk of deterioration in its asset quality over the next 12 months. Meanwhile, the rating agency affirmed National Savings Bank's ratings to reflect an almost certain likelihood of government support.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.