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NPLs seen peaking around 13-pct, some sectors hit up to 30-pct

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1 year ago

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ECONOMYNEXT –Sri Lanka’s non-performing loans after the latest currency crisis is showing signs of having peaked but some sectors are hit worse than others with problem loans dating back from Coronavirus moratoriums, a banking official said.

Hotels, transport and arts and entertainment sectors had bad loans of 30 to 20 percent, while the overall level was lower. There is a marginal set of borrowers whose loans had been re-structured at high rates and these could turn bad if no action is taken, they said.

“The good news is that our NPLs have now kind of slowed down,” Bingumal Thewarathanthri, who is chairman of Sri Lanka Banks’ Association, told the Sri Lanka Economic Summit 2023. “It was 13.6 percent. Now it is hovering around 13.1, 13.2 percent. The net is down to 7.2 from 7.8 percent. Very clearly we have come to the end of this process.”

Saying Sri Lanka’s NPLs were low around 2.5 percent in 2017, he added: “NPLs came down but suddenly went up in 2018 and 2019 because credit to private sector was double digit when the economy was growing at low single digits,” he said.

Meanwhile, Thewarathanthri said, Sri Lanka’s bad loans hit 15.8 percent in 1999, and that level was not reached in the current crisis. But some sectors are more badly affected than others

“In terms of sectors, tourism NPLs are 33 percent,” he said. “Very clearly some of the tourism sector enterprises will not recover. You can clearly see the stress in that sector. Transport and logistics is 30 percent. Disposable incomes have come down, less consumption, the sector is impacted. Some of our clients who went down during covid will never recover,” sadly.

“Interestingly arts and entertainment is also close to 20 percent. Again, when disposable income goes down there is an impact to arts and entertainment. You first eat.”

After the Easter Sunday blast, hotels were given relief. In 2020 more broad-based relief was given and extended.

“There are no standard moratoriums going forward,” Thewarathanthri said. “Banks are fully aware of who is in stress and there is a lot of restructuring happening as we speak.

There were three types of enterprises, that took moratoriums, he said. “Some took the moratoriums and somehow paid, They disposed some assets, they took cost action, they understood the size of the business what is possible, what is not possible. I would say close to half were actually have gone ahead and done that.

“There is a good 20 percent I would say who had taken the moratorium and done other things.They thought they can buy time and wait and they did not have to settle these loans. They are in stress. These firm with no cash flow are lobbying for more moratoriums.

There was a third sector which took moratoriums who were unable to settle due to due to inadequate cashflows. Some hotels had recovered close to 80 percent of pre-Covid level but were not fully recovered, but were managing to service the debt.

Many loans of the loans were restructured in the recent past at “very high rates”, which the banks had to look at again.

“That component I think all of us in the banking community will have to take a look at that component and see what more can be done,” he said.

“If there is no cashflow there is no payment. Period. We can celebrate the NPLs have come to the bottom but you never know. If that portfolio goes bad, that’s a good portfolio going bad.

“The promoters are good, the business models are good. But sadly the cashflows are not supporting. So that individual banks are actively looking at them and supporting them.”

Several other countries which had currency troubles are also hit.Ghana, a country which defaulted, amid a severe currency crisis, has about 20 percent bad loans.Bad loans in Bangladesh, which is going through ‘external stress’ was 10 percent, Thewarathanthri who is also Chief Executive of Sri Lanka’s Standard Chartered Bank said.

“There is stress in the banking systems post-Covid,” he said. “Central banks have done moratoriums. There is stress in the banking systems coming out of the moratoriums as well. What we have seen is actually larger companies have taken market share … and grown.”

Similar trends were seen in Sri Lanka, he said. “SME turnovers are down by seven to 30 percent in Asia. Some of our SMEs have completely gone down.”


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Establish a clean local governance system that utilizes budget allocations transparently for rural development – Prime Minister

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2025/04/12

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Prime Minister Dr. Harini Amarasuriya emphasized the need to create a clean and transparent local governance system that effectively utilizes budget allocations for the development of the rural sector.

The Prime Minister made these remarks on Friday (11), while addressing a public gathering held in Karainagar, Jaffna.

Elaborating further, Prime Minister Dr. Harini Amarasuriya stated:

“This country is rich in cultures and traditions and inherits a proud and prosperous history.

I was deeply moved by the information I received about Karainagar. In 1977, around 80,000 people lived in Karainagar. Unfortunately, today it has dropped to 10,500. What happened to the rest of the people? I also learned that Karainagar is home to some of the most educated and affluent people in the Northern Province. That is remarkable, but the issue is that in order to become educated and affluent, they were forced to leave Karainagar.

Who speaks up for those who could not leave? They are citizens of this country. They are entitled to have equal rights like everyone else does. As the Minister of Education, I looked into the education system in Karainagar. I discovered that there are only two schools offering GCE Advanced Level education, with only two teachers in total. Further, all students who have passed the Grade 5 scholarship exam leave Karainagar to Jaffna for further education.

Throughout the years, there were changes in governments, presidents, national administrations, members of parliament representing this area, local governments, and provincial councils but what have they done to uplift the education of Karainagar?

Education increases the value and prosperity of people. Education is vital as such. However, for decades, the right to quality education has been denied in this region. In addition, there is a severe water issue in Karainagar. Access to clean drinking water which is a basic necessity, comes at a cost to the people in this area. Various projects launched to provide drinking water have never been completed due to corruption.

Further, roads, transport, and many other services have deteriorated due to corruption at the local level. It has been 16 years since the war ended yet what has changed since then? Why have these issues not yet been resolved? That is why the upcoming local government elections are crucial. Problems at the local level must be addressed by local government institutions.

About a month ago, the first budget of the government has been passed.

A significant allocation has been made from all local government accounts for education, health, public welfare, infrastructure, and public transportation but these funds must be spent wisely.

For that, local governments should be governed by clean and corruption-free environment. Therefore, in this election, we must elect people who are free from corruption and dedicated to the purpose of serving the public. In 2024, the people of this country made a decision to change the political culture. On May 6, they will once again have the opportunity to make a thoughtful decision for the betterment of their villages.”

During the event, Minister of Fisheries . Ramalingam Chandrasekar also shared his views:

“Today, the political morality we expected for has taken root in this country. Unlike the governance of previous governments, the representatives of the current government are not exercising the power to enrich themselves and some even do not hesitate to return their salaries for serving the general public.

Today, the public service receives higher salaries, and the government is taking possible decision for the benefit of the people.”

The event was attended by Members of Parliament Shri Bhavan and Ilayankumar, along with other public representatives and candidates contesting in the local government elections.

[Prime Minister’s Media Division]

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Warm Weather Advisory issued for Eastern and Uva provinces and Polonnaruwa and Mullaitivu districts.

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2 hours ago

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2025/04/12

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Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre of the Department of Meteorology for 12th  April 2025.

The public are warned that the Heat index, the temperature felt on human body is likely to increase up to ‘Caution level’ at some places in Eastern and Uva provinces and Polonnaruwa and Mullaitivu districts

The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.

Effect of the heat index on human body is mentioned in the table below and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.

ACTION REQUIRED

Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated. Dress: Wear lightweight and white or light-colored clothing.

Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491.

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Sun directly overhead Adiyakulam, Veppankulam, Padawiya and Kuchchaveli at about 12:11 noon today [12]

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4 hours ago

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2025/04/12

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On the apparent northward relative motion of the sun, it is going to be directly over the latitudes of Sri Lanka during 05th to 14th of April in this year.

The nearest areas of Sri Lanka over which the sun is overhead today (12th) are Adiyakulam, Veppankulam, Padawiya and Kuchchaveli at about 12:11 noon

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