Fitch Ratings has upgraded the national long-term rating of Habib Bank Limited – Sri Lanka Branch (HBLSL) to ‘AA-(lka)’, up from ‘A(lka)’. The outlook for the rating is stable.
This upgrade follows the improved credit profile of HBLSL’s head office, Habib Bank Limited (HBL) in Pakistan, due to the recent upgrade of Pakistan’s sovereign rating. Fitch raised Pakistan’s Long-Term Foreign-Currency Issuer Default Rating to ‘CCC+’ from ‘CCC’ on July 29, 2024.
The upgrade reflects Fitch’s expectation of continued support from the head office, which remains a key factor due to its interconnectedness with the Pakistani state. HBLSL’s rating benefits from its integration with HBL and its legal status as part of the same entity.
Rating Sensitivities:
- Downward Revision: Potential downgrade could occur due to changes in support expectations from HBL, a downgrade of Pakistan’s rating, or other factors affecting HBLSL’s ability to meet its obligations.
- Upward Revision: An upgrade could be considered if HBL’s credit profile improves, indicating a stronger capacity to support the Sri Lankan branch.
HBLSL’s rating is closely linked to HBL’s credit profile and any developments affecting the parent bank.