The Bank’s ADR stood at ~91% in CY25, while asset quality remained robust as non-performing loans (NPL) ratio recorded at ~2.9% in 9MCY26 (CY24: ~3.4%), well below the banking sector average. AB primarily focuses on the Retail and SME sectors, which jointly account for the bulk of fund-based exposures. broad exclude09:36Claude responded: The Bank's financing book is supported by a granular retail borrower base. The Bank's financing book is supported by a granular retail borrower base.
Supported by stable spreads (that slightly improved to ~5.3%) along with robust non-financing and trade income during CY25, AB reported PBT and PAT of LKR ~4.1Bn and LKR ~2.5Bn, respectively, during CY25 (CY24: LKR ~2.7Bn and LKR ~1.8Bn, respectively).
The Bank’s capital position remained adequate in CY25, with a Capital Adequacy Ratio (CAR) of ~14.7% and a Tier 1 ratio of ~13.0%. Both ratios stood comfortably above the CBSL regulatory minimum requirements of 12.5% and 8.5%, respectively. However, capital buffers moderated from the previous year, reflecting balance sheet expansion, and continued to trail the industry average. The rating also incorporates constraints on the Bank’s earning potential arising from the limited availability of Sharia-compliant securities and limited sectoral diversification.
The rating remains contingent upon the Bank's ability to sustain its current asset quality, maintain strong capitalisation levels, and preserve its profitability trajectory. Any material weakening of capital adequacy or related regulatory ratios, or any meaningful deterioration in asset quality, would carry negative implications for the rating.