Fitch upgrades HNB's national rating to 'AA-(lka)'

Fitch Ratings Lanka upgraded Hatton National Bank's (HNB) National Long-term rating to 'AA-(lka)' (AA minus (lka)) from 'A+(lka)'.

"At the same time, the agency has upgraded the National rating of HNB's subordinated debentures to 'A+(lka)' from 'A(lka)'. Subsequently, the rating Outlook is revised to Stable from Positive," Fitch said in a statement.

It said shifting of the portfolio mix to higher yielding segments such as pawnbroking, leasing, and loans to midsized corporates saw the bank's net interest margins increasing to 5.0% in FY06 (4.5% in FY05). As such, overall profitability, as measured by return on assets (ROA), stood at 1.2% in FY06 (1.1% in FY05) and compared well with its peers.

The five largest customer exposures represented 12% of loans and 123% of equity at FYE06 (11% and 114%, respectively, at FYE05).