International ratings agency Fitch has maintained Sampath Bank PLC's national long-term rating at 'AA-(lka)' with a stable outlook, though the lender faces mounting pressures from Sri Lanka's weak sovereign credit profile and its aggressive growth strategy.

Fitch Ratings has affirmed Sampath Bank PLC's National Long-Term Rating at 'AA-(lka)' with a stable outlook, while also confirming the bank's outstanding rupee subordinated debt rating at 'A(lka)'. As Sri Lanka's fifth-largest commercial bank, Sampath maintains a strong domestic market position, though its financial performance remains closely tied to the country's broader economic challenges.

The rating agency highlighted that the bank's assessment is significantly shaped by Sri Lanka's sovereign credit rating of 'CCC+', which constrains the operating environment score for the entire banking sector. Fitch noted that Sampath's substantial exposure to government securities—representing nearly one-third of total assets at the end of 2025—and lending to the public sector creates direct linkages to state financial health. The agency expects the operating environment to remain broadly supportive, though external pressures may emerge.

Sampath has pursued an aggressive expansion strategy, with loan growth reaching 28 percent in 2025 and continuing at 11 percent into the first quarter of 2026. The bank is shifting its focus toward corporate lending, which now comprises 53 percent of its loan portfolio, partly to mitigate risks from weaker retail and small-to-medium enterprise borrowers. However, Fitch warned that this rapid balance-sheet expansion could pressure loan quality and liquidity if underwriting standards are not maintained consistently. Asset quality metrics improved somewhat, with impaired loan ratios declining to 9.3 percent by end-2025, though this remains elevated compared to similarly rated peers, largely due to small business defaults.

The rating agency identified emerging risks to capital adequacy and liquidity. The common equity Tier-1 ratio is expected to decline as loan growth continues, funded by deploying excess liquidity and deposit expansion. The loan-to-deposit ratio has risen to 82 percent as of the first quarter of 2026, approaching pre-crisis levels, suggesting that future growth will increasingly depend on deposit funding. Profitability is expected to moderate in 2026-2027, with higher impairment charges offsetting gains from expanded lending volumes.