One of Sri Lanka’s veteran bankers, Commercial Bank Plc Chairman, Mahendra Amarasuriya, cautioned the government over slow inflow of Foreign Direct Investments (FDIs).
“While economic activity has increased, the inflow of FDI has been slow. Therefore, the onus is on the government to instill confidence in the minds of prospective foreign investors,” Amarasuriya said in the bank’s Annual Report 2010/11 released this week.
“Inflation continues to be a worry. Although held under control in 2010, we may expect to see increases in the near future: inflationary pressure, already apparent, will only increase as economic growth picks up,” he added.
According to him, the recent floods that destroyed crops and infrastructure in the agricultural heartlands of the country are likely to have an exacerbating effect on food price inflation.
Bank’s Managing Director (MD) Amit Gooneratne, admitted that the increased lending placed heavy pressure on maintaining capital adequacy during the year.
“One aspect of our profile that will require close attention is capital adequacy. With economic growth and rising credit demand, a significant increase in advances portfolio is to be expected,”
According to him, already increased lending is putting pressure on the bank’s capital adequacy ratio, which currently stands at 12.27 % barely above the statutory minimum of 10 %. Building capital will, therefore, be of great importance in 2011 and going forward.
However, with stock brokers ordered by the country’s capital market watchdog to cease funding in June 2011, the banks saw opportunity in margin trading activities, he added. The bank was eyeing other potential sector as well he added.
“As Sri Lanka’s population continues to age, the demand for wealth-management services among retirees and those preparing for retirement is growing. This is one area where banks are seeing potential,” he analysed. (SF)
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