Sri Lanka has undergone a financial beating, leaving the country’s banking sector in an insecure position although some of the leading commercial banks have found a balance between risk and growth, official sources disclosed.
The banking sector’s gross non-performing loans (NPLs) ratio is set to reach 5 per cent at the end of this year, the highest rank since 2014 amid increased market lending rates and a sluggish economy, sources said.
Although the sector has a healthy growth outlook, the Central Bank is keen to keep a lid on credit expansion, while higher regulatory standards may trigger long-awaited consolidation, a senior Finance Ministry official said.
By the end of 2018, the banking sector consisted of 26 Licensed Commercial Banks (LCBs) and 7 Licensed Specialised Banks (LSBs).
Accordingly, 34 new branches were opened and 801 new ATMs were installed during the year 2018.
According to the latest government audit report, the overall Non – Performing Loans (NPL) ratio of the banking sector increased to 3.4 per cent at end of 2018 from 2.5 per cent at end 2017.
NPLs of the two main state banks, Bank of Ceylon and People’s Bank were Rs.53.75 billion and Rs. 31.47 billion respectively by the end of 2018 .
The banking sector’s NPLs continued to rise rapidly, up 39 per cent in first half of 2019 (64 per cent in 2018) and 46 per cent for the first eight months of 2019.
(LI)