Tag: Banks

Licensed Banks to  come under requirements to implement Recovery plans
Banking and Insurance, Business, Finance and Leasing

Licensed Banks to come under requirements to implement Recovery plans

Sri Lanka's Licensed Banks come under requirements to implement Recovery plans in order to strengthen crisis preparedness and to enhance their ability to respond effectively to adverse scenarios with the expected rise in sour loans when COVID-19 related moratoriums are expired, the Central Bank (CB) announced today. "Directions will be issued in due course, providing necessary guidelines. The Central Bank will continue to adapt its supervisory approaches to suit the new normal," Central Bank (CB), Governor, Professor W D Lakshman said. He revealed this while presenting "the Road Map: Monetary and Financial Sector Policies for 2021 and Beyond." Further, he also revealed that the CB would introduce a regulatory framework for technology risk management and resilience of license...
Sri Lanka’s Banks are unlikly to return to Pre-covid proftiability levels in 2021
Banking and Insurance, Business, Finance and Leasing, Investments

Sri Lanka’s Banks are unlikly to return to Pre-covid proftiability levels in 2021

Sri Lanka's Banks are unlikly to return to Pre-covid proftiability levels next year, Fitch Ratings said in a special report. "We expect this trend to continue in to 2021, albeit at a slower pace. Deteriorating asset quality and the associated higher credit costs are expected to keep banks' profitability lower in 2021 than pre-2019 levels, despite improvement from 2020 profitability," the Rating Agency said. It expects that sluggish economic activity, external and domestic vulnerabilities, muted private credit growth and the sovereign's weakened credit profile to pose significant downside risks to the operating environment for Sri Lankan banks. The rating Agency lowered its assessment of the operating environment score for Sri Lankan banks to 'ccc' with negative outlook from 'b-' ...
Financial Regulators to face dilemma once the withdrawal from Covid-19 measures begins
Banking and Insurance, Economy, International Business, Opinion

Financial Regulators to face dilemma once the withdrawal from Covid-19 measures begins

The Financial Regulators across the World will face a dilemma once the withdrawal from Covid-19 measures begins as to how and when to exit from regulatory relief measures in balancing the benefits of economic relief with financial stability considerations. "The challenge will be how and when to exit from regulatory relief measures. In terms of timing, authorities need to steer a course between Scylla and Charybdis. Acting too early may remove much needed credit to support economic growth. Waiting too long may delay necessary resource reallocation and put additional long-run pressure on the financial sector as the solvency phase of the crisis could expose any depletion of loss-absorbing resources, potentially undermining confidence in the post-crisis regulatory regime and its abilit...
Sri Lanka’s banks became more flexible in lending in 3Q
Banking and Insurance, Business, Economy

Sri Lanka’s banks became more flexible in lending in 3Q

Sri Lanka's banking sector was more open to lending for borrowers in retail, corporate, and SME categories in the third quarter of the year amidst improved risk perception and improved liquidityposition. However, due to the impacts from the second wave of COVID-19 on the credit supply, the Central Bank (CB) expects the banks to become more conservative in lending in the current (Q4) quarter. In the third quarter, the demand for loans was significantly up across all categories driven by the sharp reduction in interest rates. "Loans demanded by the corporate category for the purposes of working capital and debt restructuring showed an increase in 2020 Q3," CB said. Meanwhile, the CB expects the demand for loans to increase further in Q4 with the optimism prevailed on the re...
Sri Lanka’s banks to show reluctance to absorb their subsidiary Finance Firms – Fitch Ratings
Banking and Insurance, Business, Economy, Finance and Leasing, International Business

Sri Lanka’s banks to show reluctance to absorb their subsidiary Finance Firms – Fitch Ratings

Sri Lanka's banks would be reluctant to absorb their financeĀ and leasing companies (FLC) due to the significant difference between their risk profiles and underwriting practices which could lead to elevated challenges in achieving effective management, According to Fitch Ratings. The government's budget speech, presented on 17 November 2020, reiterated the importance of consolidation in the FLC sector, which has been on the cards since 2014 when the Central Bank (CB) announced its 'Master Plan for the Consolidation of the Financial Sector'. It led to several banks acquiring FLC subsidiaries in 2014 and 2015, including the acquisition of HNB Finance (then Prime Grameen Micro Finance Limited) by Hatton National Bank and Serendib Finance (then Indra Finance Limited) by Commercial Bank of ...