ICRA Lanka Limited, a subsidiary of ICRA Limited, a Moody’s Investors Service group company, has allocated to the National Savings Bank (NSB or Bank) the issuer score of [ SL]AAA (Pronounced SL triple A) with a stable perspective.
The rating takes note of the 100% Government of Sri Lanka (GoSL) ownership, which provides a strong likelihood of sovereign support and, the 100% explicit guarantee provided by the Government of Sri Lanka (GoSL) for the moneys deposited with the Bank and the interest thereof through the National Savings Bank Act (NSB Act). The rating factors in the low-risk investment portfolio, good quality lending portfolio and the presently adequate capital profile.
The earnings of the Bank moderated as a result of derecognition of LKR 3.6 Bn as net income earned from the government securities transactions from April 01, 2019 as a result of removal of Withholding Tax from government securities transactions.
The Bank’s investment portfolio is characterized by low risk, with NSB mandated to invest a minimum of 60% of the total deposits in government securities; as in March 2019, 62% of the deposits were in government securities. The quality of the lending portfolio is driven by zero NPAs reported on its exposure to GoSL, SOE1 and corporate portfolio which accounted for 41% of the lending portfolio.