Business Times

Banking sector buoyant for 2012

By Duruthu Edirimuni Chandrasekera

With the strong earnings outlook, increase in expected credit growth, the banking sector for 2012 remains buoyant, according to industry analysts. “The increase in expected credit growth is more than 20% and the average gross nonperforming loan ratio is down to about 4.5%. There are healthy capitalization levels and a return on equity of nearly 18% - all of which makes this sector attractive," Danushka Samarasinghe, Director Research TKS Securities noted. He said that the negative market sentiment, the banking sector counters which have shed ground currently appear very attractive at the current price levels.

Industry analysts note that despite the pressure created on interest margins in a declining interest rate environment, banking sector achieved a remarkable growth during 2010 registering a 18% year on year growth in total asset base to stand at Rs 3,548 billion as at 31 December 2010 and it will do the same this year as well. During 2010 declining interest rates stimulated the business volumes of the banking sector with loans and advances growing by 23% year on year to reach Rs 1,959 billion.

Slashing interest rates in 2011 saw credit growth accelerate with private sector credit growth reaching a 16 year high of 34.4% year on year in June 2011 driven by high economic activity. Analysts said that to ensure the sustainability of the financial system, it is anticipated that the interest rates would rise by 150 to 250 basis points this year. “Even though in general the rising interest rates slowed down the economic activity, Sri Lanka managed to secure satisfactory growth levels amidst the higher interest rate environment during the past years. Therefore the country would still be able to accept this level of rise in the rates,” Mr. Samarasinghe said.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
 
Other Business Times Articles
Two major conglomerates in the fray to buy Golden Key Hospital
CB seeks clarity from IMF on interest rates
SL's Expropriation Bill: A thorn in US funding
Textured Jersey plans new unit here or abroad
New operator sought for India-SL ferry service
Comment - Helping local creators cum entrepreneurs
On stock misfortunes and expert explanations
World faces a 600 mln-jobs challenge, warns ILO
Addressing the brain drain: To return or not?
Sri Lanka’s top driving school ventures into Social Network Marketing
Microimage to showcase best in HR technology and services
Australia’s IIBT to use Sri Lanka as base for South Asia
Sri Lankan-led Beijing firm to light up rural homes
Should top, retired Central Bankers join private institutions under their supervision?
Global volatility may affect SL bank assets : Fitch
Judicial independence and judicial bias
Inflation fell last month
Banking sector buoyant for 2012
2% SL GDP growth lost due to corruption : Top economist
Business Community to pass the pillow on AIDS awareness
Basic guide to shipping and exporting (products)
Sri Lanka objects to ‘Carbon footprint’ and “Water print” proposal as requirements for future tea exports
Expolanka Holdings reports post-tax profit of Rs. 903 mln in latest review
BIA to handle 15 million passengers by 2015
Weaving a tale of life, commitment and entrepreneurship
Sri Lanka's first LPO conference opens on Thursday
Aviation policy to boost air cargo, transshipment
CB, SEC considering T-Bills and bonds index
Proposal for Govt. research scientists to resort to ‘private consultancies/practice’ like state doctors
Master plan for Colombo transport includes pedestrian path planning
LOLC’s strong commitment to renewable energy recognized
New food regulations permit added substances to bread
Government to assist Sri Lankan inventors to explore foreign markets
Sampur coal power project to proceed under Indian pressure
Government pledges that it will never privatize Sevanagala Sugar Co. again
Colombo bourse under a cloud
Next attraction for Chinese tourists in Sri Lanka: Zheng He
Central Bank unveils second memorial for bomb victims

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 1996 - 2012 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved | Site best viewed in IE ver 8.0 @ 1024 x 768 resolution