National Development Bank : RATING REVIEW - 24 June 2016

7123d54a-a301-47b7-95ec-2702cc1021ce.pdf

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• 24/06 16 FRI 16:33 FAX 94 11 2440262 • NDB GM'S OFFICE '41001

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24ch June 2016

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P. 0. 80)( 182!5

4(), Navam Maw:stha, Colombo - 2, Sri l.8nka.

Mr. Renuke Wljaya wardha ne Chief Operating Officer Colombo Stock Exchange Level 4, 4-1, West Tower World Trade Centre

Echelon Square

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Dear Sir,

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Fitch assigns NDB long term rating of A+ (lka)/ Stable Outlook

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This is to inform you that Fitch Ratings Lanka Limited (Fitch) has assigned National Development Ba nk PLC (NDB) a long ter m nationa l rating of A+ (lka) with a Stable Outlook pursuant to Fitch's annual rating review on NDB. This is a one notch downgrade from NDB's previous rating of AA­ (lka)/ Stable Outlook.

Accord ing to Fitch's report on its rating action for NDB, ''the downgrade reflects the decline in NDB's capita li:c:ation alongside continued strong growth, and weaker profitability. Fitch's expectation that the bank's highe r risk appetite could dilute the benefit of a capita l infusion has been incorporated in the rating action. NDB's ratings reflect its satisfactory asset quality, weaker fra nchise and l_o wer capitalization relative to higher rated peers''.

The assigned subordinated debt ratings of NDB have moved in tandem with the banks' nattonal long term ratings, which are rated one notch below the national long ter111 ratings to ref lect the

subordination to senior unsecured creditors.A5 such the subordinated debentures of N OB are now

rated at 'A (lka)'

NDB rema ins governed by a robust corporate governa nce and risk management framework and a strong strategic fra mework which ensure sustainable profita ble growth. The Bank's meticulous interna l capital adequacy assessment process (ICAAP) ensures that the Bank attains sustainable

growth levels that are commensurate to its capital. The Bank is also buffered against the high capita l adequacy levels of the NDB Group, the Tier I of which is .at over 10%, well above the statutory minimum requirement of 5%.

N DB is internally mindful of the need for the infusion of fresh capital, and will communicate its plans towa rds this end,once it is In a position to do so.

NOB remains committed to its ambitious profita ble growth pla ns, in yielding sustaina ble returns to

its shareholders,customers and allother stakeholders.

Yours faithful ly

NATIONAL DEVELOPMENT BANK PLC

Rajenara Theaga rajah Director/Chief Executive Officer

Te le pho ne : 9 4 11 244844 8 Fax : 94 11 24 4 0262 E-ma il : cont a ct@ ndbbank .com We bs it e : ww w.n dbba n k .c om

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Office of the Chief Executive Officer Telephone : 2448889