Sri Lanka bank NPLs steady in Oct with 25-pct moratorium, non-banks improve
ECONOMYNEXT – Non-performing loans in Sri Lanka’s banks were steady at 5.2 percent by October 2020 though a substantial volume of loans were under a Covid-19 moratorium while bad loans in non-bank finance companies were 12.8 percent by September, officials said.
“October for the banks the gross ratio is 5.2 percent ” Central Banka of Sri Lanka, Assistant Governor, T.M.Y.J.P. Fernando said.
“And the net ratio is 2.4 percent. The only thing we have to be mindful is the moratorium we have.So during the moratorium these values are there.”
By end August 25 percent of performing loans and 20 percent of the non-performing loans were under moratorium, a central bank report said earlier.
In June bad loans were 5.3 percent, amid weak credit which tends to worsen the ratio.
Sri Lanka central bank had been urging banks to boost their capital long before the Coronavirus pandemic hit. After the crisis, several rules were relaxed.
When the rules are normalized NPLs could rise higher, rating agencies have said.
“Banks in India and Sri Lanka could post larger capital declines without public or private capital injections,” Moody’s a rating agency said.
In finance companies NPLs were 12.8 percent in September Deputy Governor H AKarunaratne said.
About 105 billion rupees in credit was in moratorium, he said.
The net ratio was 3.8 percent, Fernando said.
NPLs were 14.14 percent in the June quarter for finance and leasing companies. In June annualized return on assets was a negative 2.31 percent. By September returns had improved to 1.09 percent.
Sri Lanka’s economy made a strong recovery after killing Coronavirus and re-opening. However, an outbreak came back in October and authorities delayed identifying a cluster at a fish-market which infected thousands of people in built up areas in Colombo. (Colombo/Dec01/2020)