Sri Lankan bank net interest margins seen stabilising

ECONOMYNEXT – Sri Lanka’s listed banks are expected to have a steady phase of growth during the 2018-20 period with net interest margins stabilising, stock brokers First Capital said in a research report.

It attributed the forecast to stable credit growth, improving economic growth supporting lower non performing loans and lower interest rate volatility leading to stable NIMs.

“We expect the banking sector interest spreads to stabilize in 2017E and thereon,” it said.

The trend would be backed by the implementation of an inflation targeting framework by the central bank, improved government revenue streams and increased foreign inflows into government securities market, First Capital said.

The introduction of a Liability Management Bill is expected to reduce volatility and stabilize the interest rate and rate of inflation while the flexible exchange rate policy further supports it.

Improved government revenue and increased foreign inflows are expected to stabilize interest rates, the report on the anking sector said.

“The stable interest rate regime is expected to result in more stabilized interest margins in the banking sector.”

(COLOMBO, January 05, 2018)

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