Fitch Ratings has assigned DFCC Bank PLC's (A(lka)/Stable) proposed Basel III-compliant subordinated unsecured debentures of up to LKR12.5 billion a final National Long-Term Rating of 'BBB+(lka)'.
The proposed debentures will mature in five years and will be listed on the Colombo Stock Exchange. The bank plans to use the proceeds to strengthen its Tier 2 capital base and to support balance sheet growth.
The bank expects the proposed debentures to qualify as Basel III-compliant regulatory Tier 2 capital. The debentures include a non-viability clause whereby they will convert to ordinary voting shares upon the occurrence of a trigger event, as determined by the Governing Board of the Central Bank of Sri Lanka.
The final rating is the same as the expected rating assigned on 20 July 2026 and follows the receipt of documents conforming to information already received.
Key Rating Drivers
DFCC's Sri Lankan rupee-denominated subordinated debt is rated two notches below the bank's National Long-Term Rating anchor. This reflects our baseline notching for loss severity on this type of debt and expectations of poor recoveries. There is no additional notching for non-performance risk, as the notes do not incorporate going-concern loss-absorption features.
We use DFCC's National Long-Term Rating as the anchor for this instrument, because it reflects the bank's standalone financial strength and best indicates the risk of the bank becoming non-viable.
We reviewed DFCC's ratings with no rating action on 8 September 2025. See our latest rating action commentary, Fitch Upgrades 10 Sri Lankan Banks' National Ratings and Affirms Five after Scale Recalibration, published on 21 January 2025, for the key rating drivers and sensitivities.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of the bank's National Long-Term Rating will lead to a downgrade of the subordinated debt rating.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of the bank's National Long-Term Rating will lead to an upgrade of the subordinated debt rating.
Date of Relevant Committee
08 September 2025
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
RATING ACTIONS
Entity / Debt
Rating Type
Rating
Rating Action
Prior
DFCC Bank PLC
subordinated
Natl LT
BBB+(lka)
New Rating
BBB+(EXP)(lka)
Page
of 1
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The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.
APPLICABLE CRITERIA
National Scale Rating Criteria (pub. 22 Dec 2020)
Bank Rating Criteria - Effective from 21 March 2025 to 8 May 2026 (pub. 22 Mar 2025) (including rating assumption sensitivity)
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Solicitation Status
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ENDORSEMENT STATUS
DFCC Bank PLC -
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