Bank Report

Sept 10, 2013 (LBO) – Bad loans rose across Sri Lanka’s listed banks as economic conditions weakened and defaults in gold loans took their toll, but capital remained strong, and loan to deposit ratios were narrowing, an equities research report said. A report by CAL Research said gross NPL ratios of banks had risen 72 basis points to an average of 4.7 percent by June 2013 from a year earlier.

NPLs at PABC rose 365 basis points to 7.8 percent, NTB was up 114 basis points to 4.0 percent, HNB was up 89 basis points to 4.6 percent and Commercial Bank was up 67 basis points to 4.0 percent.

NDB was up 54 basis points to 1.9 percent, Sampath up 46 basis points to 2.5 percent and Union Bank was up 25 basis points to 5.7 percent.

At Seylan, NPLs declined 184 basis points to 11.2 on a higher earlier base.

Loan loss charges were higher partly due to gold-backed (pawning loans) as gold prices fell. Loan to value ratios were now reduced to 60 to 65 percent from an earlier 80 to 85 percent.

Bank forex earnings were also down despite a weakening rupee, as the swap cost of dollar loans hit bank earnings.

But capital adequacy at listed banks was above the minimum 10 percent despite some weakening the report said. Capital ranged from 18