Banking sector hit hard by the pandemic, but resilient
View(s):Sri Lanka’s banking sector has got the biggest brunt of this pandemic but it is still strong and resilient, according to industry analysts.
While there’s some thinking that adequate provisioning hasn’t been made for the state – declared moratorium, senior commercial bankers were adamant that more than 60 to 70 per cent provisioning cover has been made. “In fact we have recognised sectors such as tourism as ‘risk elevated’ sectors and made additional provisioning for the moratorium,” a senior banker told the Business Times. He added the moratorium component was 35 per cent of the total loan portfolio as at last July but as at last December it’s only 10 per cent. “Of this, only about 5 per cent is in the tourism sector. By this month, the balance 5 per cent of other industries would’ve ended the moratorium which puts the sector in a much better wicket.”
The banking sector holds liquid assets which are threatened or vulnerable in the current currency depreciation setting but bankers say that their foreign exchange profits are retained in foreign currency which will balance this impact.
An industry analyst said that as most businesses are seeing a rebound, the banking sector will pull through, but they will no doubt have to ‘handle’ a few of the moratorium cases cautiously. (DEC)