Aug 27, 2013 (LBO) – Sri Lanka’s Nations Trust Bank expects loan growth to pick up towards the end of the year but the lender will be cautious and maintain liquidity, a top official said. “We estimate some revival in credit demand by fourth quarter of this year,” NTB chief executive Renuka Fernando told an investor forum.
“Whilst that will help us grow our assets book, one thing we are very conscious of and we have a prudent approach is liquidity.
“We will maintain good liquidity levels, as there is strife going on especially in India and some emerging markets.”
NTB’s loan book grew 5 percent to 77.3 billion rupees in the six months to June 2013 compared to a 12 percent growth in the first half of 2013.
Sri Lanka is recovering from balance of payments pressure caused by Central Bank accommodated credit growth in 2011 and 2012.
When a central bank ‘accommodates’ by injecting rupee reserves in to banks, credit growth outpaces deposit growth, leading to ‘foreign exchange shortages’ when the central bank credit eventually translate into imports.
Loan to deposit ratios of banks deteriorate.
When interest rates are raised to eventually stabilize the econo