JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Samba Bank Limited (Samba) at 'A/A-1' (Single A/A- One). Outlook on the assigned ratings is 'Stable'. The ratings of Samba take into account the support emanating from its key sponsor - Samba Financial Group.
In addition to equity support, Samba has benefited from its sponsor's expertise in various aspects of banking operations, as reflected in ongoing improvement in technology and risk management infrastructure, strengthening of the policy framework and training of human resource personnel. Although efforts to rationalise funding costs are beginning to post results, meaningful growth in low cost schemes and broad based funding access may take time to develop.
JCR-V1S will continue to monitor the bank's ability to develop access to a diversified funding mix, as new liability products currently in the pipeline, are introduced in the market. General pressures in the macroeconomic environment have also hindered progress towards achieving other key milestones incorporated in the business strategy.
While spreads have improved slightly, profitability has been impacted by further charge offs as well as some one-time costs of re-branding and system integration. Going forward, the bank also has plans to rationalise its overheads. Current capitalisation levels allow significant room for growth and further injection is also on the anvil, to meet minimum capital requirements.-PR
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