Bank of Ceylon - LKR 15Bn Basel III compliant Tier 2 Debentures

06-Oct-26

01

Applicable Criteria

Methodology | Debt Instrument Rating | Aug-24

Methodology | Financial Institution Rating | Aug-24

02

Related Research

Sector Study | Commercial Bank | Feb-26

03

Analyst

Richmond Reginald | richmond@lra.com.lk
+94 114 500099 | www.lra.com.lk

PRESS
RELEASE

DISCLAIMER

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to LRA

Rating Type	Debt Instrument
Rating Type	Current (06-Oct-26)	Previous (29-Aug-24)
Action	Upgrade	Preliminary
Rating	AA	AA-
Outlook	Stable	Stable
Rating Watch	-	-

The assigned rating reflects Bank of Ceylon's ("BOC" or "the Bank") preeminent position as the largest Commercial Bank in Sri Lanka (in terms of deposit base), underpinned by sovereign ownership, systemic importance and very strong franchise value. BOC is a designated Domestic Systemically Important Bank (DSIB) and is 100% owned by the Government of Sri Lanka (GoSL). These fundamental strengths highlight the Bank's importance in the Sri Lankan financial system and very high likelihood of support, if needed. The Bank demonstrated strong growth in its deposit base, which remains granular, and advances during CY26. This has strengthened the Bank's capacity to absorb the potential credit impact of SOE-related obligations, if these materialized. BOC's Gross NPLs stood at ~12.11% as at 6MCY26 (6MCY25: ~13.40%), higher than the industry average of ~9.30%. BOC enjoys strong capitalization with reported Capital Adequacy Ratio of ~17.22% as of 6MCY26, remaining above the regulatory requirement of 15%, although marginally below its peers (~18.50%). BOC maintains significant investments in Government Securities (LKR ~2.6tn as of CY25, LKR ~2.3tn as of CY24), comprising 98% of total investments, strengthening the liquidity position of the Bank. During CY25, the Bank reported a healthy increase of ~18% YoY in its PAT to record at LKR ~76.0bn (CY24: LKR ~64.4bn). This trend continued in 3MCY26 as Net Interest Income (NII) increased to LKR ~53.0bn, on account of loan portfolio growth, translating into strong profitability. The Bank continues to manage its foreign currency exposure by limiting its open position and strengthening its liquidity profile, reflected in a Liquidity Coverage Ratio (LCR) of 283.00% in 6MCY26 (CY25: LCR ~296.00%).

The rating is dependent on the Bank’s ability to uphold its asset quality, capital position, and performance indicators in the near term. The Bank’s 100% ownership by the Government of Sri Lanka (GoSL) and the expectation of timely support remain key considerations in the rating assessment.

About the Entity

Bank of Ceylon is a State-owned commercial Bank in Sri Lanka, established under the Bank of Ceylon Ordinance No. 53 of 1938. The Chairman of the Board is Mr. Kavinda M L De Zoysa and the management team is led by Mr. Y.A. Jayathilaka, the General Manager/Chief Executive Officer.

About the Instrument

Bank of Ceylon has issued Basel III-compliant, Tier 2, listed, rated, unsecured, subordinated, redeemable 5-year debentures with non-viability write-down features, successfully raising LKR 15bn offering a fixed annual interest rate of 13.50% p.a. The oversubscribed issue was listed on the CSE on October 2, 2024. Initially, an issuance of LKR 5bn was made, which was subsequently increased to the total LKR 15bn through two additional tranches of LKR 5bn each following the oversubscription.

Lanka Rating Agency Limited

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Tel: +94 11 450 0099

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