News
Fitch Ratings downgrades NDB Long-Term Rating to ‘A-(lka)’
View(s):Fitch Ratings has downgraded National Development Bank PLC’s (NDB) National Long-Term Rating to ‘A-(lka)’ from ‘A(lka)’.
The Outlook is Negative, a statement from the global ratings agency said Friday. Fitch has also downgraded the rating assigned to NDB’s Basel III-compliant subordinated debentures to ‘BBB(lka)’ from ‘BBB+(lka)’.
The downgrade reflects NDB’s weakened credit profile relative to that of similarly rated peers, following a fraud incident announced by the bank, the statement said: “We believe the incident has put pressure on the bank’s capitalisation and profitability relative to that of similarly rated peers. The downgrade also reflects deficiencies in the bank’s internal risk controls relative to peers.”
The Negative Outlook reflects uncertainty over the investigation into the fraud and its potential impact on the bank’s operations, including possible changes to its business and risk profiles, the statement continued.
NDB said on April 2 that the fraud involved some bank employees and one or more external parties.
NDB’s follow-up announcement on April 6 said the estimated size of the fraud was approximately Rs 13.2 billion. This is equivalent to around 1.3% of the bank’s end-March 2026 total assets.
“Fitch estimates gross losses related to the fraud at around 2.3% of NDB’s risk-weighted assets at end-2025,” the statement outlined.
“This would reduce the core profitability metric of operating profit/risk-weighted assets to less than 2% in 2025, below that of similarly rated peers. We expect profitability to recover over the medium term, but the incident is likely to hamper the bank’s achievement of projected profitability objectives.”
Fitch may revise the Outlook to Stable if the bank restores and maintains capital buffers to levels that are more commensurate with that of peers and supportive of its risk profile, the agency asserted.
A Stable Outlook could also be supported by effective and durable remediation of the control weaknesses exposed by the incident, reducing the risk of any damage to the bank’s franchise and business profile.
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