Lankan banking sector resilience weak, asset quality to deteriorate further: S&P
Says fallout of past aggressive growth and adverse weather Expects no sharp decline in asset quality going forward
Sri Lanka’s banking sector’s strength to withstand cyclical economic shocks remains weak and is affected by the country’s low income levels, said Standard & Poor’s, while revising the country’s economic risk trend to ‘stable’ from ‘negative’.
Issuing the latest banking industry country risk assessment (BICRA) for 2018, the global rating agency headquartered in the United States said Sri Lanka’s banking sector is facing higher credit risk driven by relaxed lending, underwriting standards and evolving risk management practices.
After years of cheap bank lending, Sri Lanka’s banking sector asset quality took a beating in 2018 with gross non-performing loans spiking during the first two months of the year as the economy slowed overall in response to higher borrowing cost and taxes.