Fitch Ratings has acted on the National Long-Term Ratings of eight Sri Lankan banks after recalibrating its Sri Lankan national rating scale, a consequence of the sovereign upgrade it made in September.
Bank of Ceylon and People’s Bank were both upgraded to ‘AA+(lka)’ from ‘AA-(lka)’ with Stable Outlooks, and Commercial Bank of Ceylon to ‘AA(lka)’ from ‘AA-(lka)’, also Stable, Lanka Business Online reported.
The eight actions
| Bank | Action |
|---|---|
| Bank of Ceylon | Upgraded to AA+(lka) from AA-(lka); Stable |
| People’s Bank | Upgraded to AA+(lka) from AA-(lka); Stable |
| Commercial Bank of Ceylon | Upgraded to AA(lka) from AA-(lka); Stable |
| Nations Trust Bank | Affirmed at A(lka); Outlook revised to Positive from Stable |
| Union Bank of Colombo | Affirmed at BBB-(lka); Outlook Negative |
| Cargills Bank | Downgraded to A-(lka) from A(lka); Outlook Negative |
| HDFC Bank of Sri Lanka | BB+(lka) maintained on Rating Watch Positive |
| State Mortgage & Investment Bank | BB(lka) maintained on Rating Watch Positive |
What a rescaling does and does not mean
The recalibration follows Fitch’s upgrade of Sri Lanka’s Long-Term Local-Currency Issuer Default Rating to ‘B-’ with a Stable Outlook, from ‘CCC+’, on 22 September 2026. Fitch published the rescaling on 21 October.
National scale ratings rank credit risk relative to other issuers in the same country, and carry the ‘(lka)’ identifier precisely because they are not comparable with Fitch’s international scale. An upgrade on a recalibrated national scale therefore reflects a bank’s position against domestic peers on a redrawn ruler — not necessarily an improvement in the bank’s own finances.
Fitch said the sovereign’s improved credit profile eases macroeconomic risk in the banks’ operating environment, which it recently raised to ‘b-’ from ‘ccc+’, and reduces asset-quality risk from their direct and indirect sovereign exposure. The upgrades for Bank of Ceylon and People’s Bank are driven by their standalone credit profiles and reflect “greater room for positive differentiation” on the new scale, recognising their market-leading customer reach, branch networks and deposit franchises.
Against that, Cargills Bank was downgraded and given a Negative Outlook, and Union Bank of Colombo’s Negative Outlook was retained — so the rescaling did not lift every institution. The review covers national ratings only and does not affect Bank of Ceylon’s international-scale Issuer Default Ratings.
Not reported
The filing does not give the reasons for the Cargills Bank downgrade or for Union Bank’s Negative Outlook, and does not state what would resolve the Rating Watch Positive on HDFC and SMIB, or when.
Single source. This is a Fitch rating-action release carried by a verified newsroom. No other verified outlet this desk can fetch had filed on it: Ada Derana has returned an HTTP 403 block for some 48 days, and EconomyNext’s site returned an HTTP 520 error throughout this cycle. A separate report of a similar action on ten banks appeared on a non-verified outlet and is not reflected here.