Fitch Upgrades People’s Leasing, MBSL and CBC Finance; Outlooks Stable
COLOMBO, November 5, 2026 — Fitch Ratings has upgraded the National Long-Term Ratings of three Sri Lankan bank-owned non-bank financial institutions, reflecting their parent banks’ improved capacity to provide financial support following recent rating upgrades.
People’s Leasing and Finance PLC and Merchant Bank of Sri Lanka & Finance PLC (MBSL) were upgraded to ‘AA-(lka)’ from ‘A(lka)’, while CBC Finance PLC was upgraded to ‘A+(lka)’ from ‘A(lka)’. All three carry Stable Outlooks.
The actions follow upgrades to their respective parents—People’s Bank, Bank of Ceylon and Commercial Bank of Ceylon—announced on October 30, 2026. People’s Bank and Bank of Ceylon hold National Long-Term Ratings of ‘AA+(lka)’, while Commercial Bank is rated ‘AA(lka)’, all with Stable Outlooks.
Fitch said the subsidiaries’ ratings are driven by expectations of extraordinary parental support if required. High ownership stakes, management oversight and shared branding in certain cases increase the reputational risks parent banks would face if their subsidiaries failed.
People’s Bank owns 75% of People’s Leasing, Bank of Ceylon holds 84.4% of MBSL, and Commercial Bank fully owns CBC Finance.
People’s Leasing’s longstanding and largely successful role as the People’s Bank group’s leasing arm supports Fitch’s assessment of the parent’s willingness to provide assistance. However, the subsidiary’s sizeable balance sheet relative to its parent remains a consideration.
MBSL plays a more limited role within the Bank of Ceylon group. Fitch noted that high growth and variable profitability have placed pressure on its regulatory capitalisation and leverage. Nevertheless, the agency expects Bank of Ceylon’s past shareholder support to remain available for growth and regulatory capital requirements over the near to medium term.
CBC Finance’s modest role within its parent group and variable performance could limit Commercial Bank’s willingness to provide support, although recent earnings and asset quality have improved, Fitch said.
The ratings remain sensitive to changes in the parent banks’ credit profiles and their ability and willingness to provide timely assistance. Sustained weak performance, reduced links with a parent or substantial balance-sheet expansion relative to the parent could place downward pressure on a subsidiary’s rating.
Further upgrades could follow improvements in parental credit strength or a greater role and contribution from the subsidiaries within their respective groups.
Fitch said the institutions’ outstanding and proposed rupee-denominated subordinated debt instruments are rated two notches below their National Long-Term Ratings, reflecting expected loss severity in the event of default. Changes to the institutions’ ratings would result in corresponding action on these debt ratings.
The agency emphasised that ratings carrying the ‘(lka)’ identifier rank credit risk within Sri Lanka. They are not directly comparable with international ratings or national ratings assigned in other countries.
