International ratings agency Fitch has maintained Sampath Bank PLC's National Long-Term Rating at AA-(lka) with a stable outlook, citing the bank's strong domestic position despite exposure to Sri Lanka's challenging sovereign credit profile.
Fitch Ratings has affirmed Sri Lanka's Sampath Bank PLC with a National Long-Term Rating of AA-(lka) and a stable outlook, while also maintaining the rating on the bank's subordinated debt at A(lka). The affirmation reflects Sampath's position as the country's fifth-largest commercial bank, supported by a strong domestic franchise, though tempered by significant exposure to Sri Lanka's weak sovereign credit environment.
The rating agency identified several key drivers in its assessment. Sampath's financial strength is substantially constrained by Sri Lanka's sovereign rating of CCC+, which influences the bank's operating environment score. The bank holds nearly one-third of its total assets in government securities and maintains considerable exposure to the public sector through lending, tying its financial health closely to state performance. Fitch noted that while the operating environment is expected to remain broadly supportive, external pressures could challenge domestic conditions and sector performance.
Sampath demonstrated robust lending expansion, with loan growth of 28 percent in 2025 and an additional 11 percent in the first quarter of 2026. The bank's loan portfolio has increasingly shifted toward corporate lending, which represented 53 percent of total loans by end-2025. This strategic reorientation reflects the bank's effort to reduce exposure to retail and small-to-medium enterprise borrowers, who face greater risks in the challenging domestic environment. Fitch anticipates this trajectory will continue, with cross-border corporate lending supporting growth.
However, Fitch identified emerging pressures on the bank's financial metrics. The agency expects profitability to moderate as loan growth is offset by narrowing margins and higher impairment charges. The bank's common equity Tier-1 ratio is projected to decline due to rapid loan expansion, dividend payments, and mark-to-market losses on government securities holdings. Additionally, the loan-to-deposit ratio is rising toward pre-crisis levels at 82 percent, narrowing liquidity buffers and increasing reliance on deposit-funded growth.
The bank's impaired loan ratio improved to 9.3 percent by end-2025 from 13.5 percent the previous year, though Fitch expects credit impairments to increase moderately over the medium term amid the difficult operating environment. Fitch noted that any potential upgrade of the national rating would likely depend on an improvement in Sri Lanka's sovereign rating, while downgrades could stem from deterioration in the bank's credit metrics relative to peers or further sovereign weakness.
