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Fitch Affirms Citibank N.A. - Colombo Branch at 'AAA(lka)'; Outlook Stable
August 29, 2017 / 6:04 AM / in 4 months

Fitch Affirms Citibank N.A. - Colombo Branch at 'AAA(lka)'; Outlook Stable

(The following statement was released by the rating agency) COLOMBO, August 29 (Fitch) Fitch Ratings Lanka has affirmed Citibank N.A. - Colombo Branch's (CitiSL) National Long-Term Rating at 'AAA(lka)'. The Outlook is Stable. KEY RATING DRIVERS CitiSL's rating reflects the credit profile and financial strength of Citibank, N.A. (Long-Term Issuer Default Rating (IDR) at A+/Stable and Viability Rating at a). The rating is linked with Citibank, N.A.'s IDR to reflect CitiSL's legal status as a branch of Citibank, N.A., which makes it part of the same legal entity. It also reflects the relatively small size of the branch (less than 1% of the total assets of Citibank, N.A.) and therefore, any support would not be material to the head office. Citibank, N.A. 's rating is higher than Sri Lanka's Long-Term Local- and Foreign-Currency IDRs of 'B+'/Stable and as a result, CitiSL's rating is at the highest end of the National Rating scale for Sri Lanka. Fitch believes that support from Citibank, N.A. would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka. CitiSL is operationally integrated with Citigroup through the use of common systems and regular reporting. Its strategic objectives are also aligned with those of the group. CitiSL's stringent credit evaluation framework has helped the branch to maintain sound asset quality with zero non-performing loans since 2009. However, it has also led to a highly concentrated loan book, with the top 20 largest loans accounting for 97% of total lending at end-1H17. Fitch expects the branch to maintain sufficient capitalisation to support its business plans despite regular profit repatriations. CitiSL's Fitch Core Capital ratio remained high at 34.6% at end-June 2017, although it declined from the 44.5% at end-2016 due to aggressive loan growth in 1H17. CitiSL's highly concentrated deposit base declined to 76.3% of the branch's funding mix at end-1H17 from 85.6% at end-2015, due to an increase in inter-branch borrowings. However, Fitch believes that CitiSL's liquidity position is stable as the branch has access to intergroup funding, if needed. RATING SENSITIVITIES A downgrade of CitiSL's rating could result from Citibank, N.A.'s rating falling below Sri Lanka's IDR, although Fitch sees that as highly unlikely in the near to medium term. Significant changes to Fitch's expectation of support from CitiBank N.A. could also have a negative impact on the rating. Contact: Primary Analyst Sugath Alwis, CFA Analyst +94 1 1254 1900 Fitch Ratings Lanka Ltd. 15-04, East Tower, World Trade Center Colombo 01, Sri Lanka Secondary Analyst Dilranie Mudannayake Analyst +94 1 1254 1900 Committee Chairperson Sabine Bauer Senior Director +852 2263 9966 Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(lka)' for National ratings in Sri Lanka. Specific letter grades are not therefore internationally comparable Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here National Scale Ratings Criteria (pub. 07 Mar 2017) here Additional Disclosures Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. 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