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

Daily Mirror (Sri Lanka) - - LATE CITY -

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.

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