Banks: Big Profits Or What?

Dilshan Wirasekara, Chief Executive Officer of First Capital Treasuries PLC

Banking sector stocks were top performers at the Colombo stock exchange last year as analysts predicted a good year for the countrys finance houses. A number of banks are expected to announce record profits this year.
However, borrowers are protesting about high interest rates charged by commercial banks despite the prevalent low risk free rates.

Borrowers want government intervention to bring rates under control.rn

rnSmall businesses are important contributors to the economy.

They provide jobs to the local community and together play a major role in the development of the country.

But these business ventures also face heavy odds.rn

rnWorking capital finance is one of the biggest problems. rn

rnSmall companies pay nearly 25% in overdraft interest to finance its working capital needs.rn

rnCritics however say that key benchmark rates are at some of the lowest levels seen in a long time.rn

rnInterest rates generally follow the pattern set by the Central Banks benchmark rates.rn