The economic downturn in 1Q 2023 hit badly on the banking sector as the non-performing loan ratio has elevated to 12.9% from that of the previous quarter’s 11.5%. The moratorium offered during the pandemic era ended in Jan 2023 and many sectors are still struggling to recover has put banks in a bad position.
Interest rate reduction by CBSL would take more time to pass through to the economy, as banks will be reluctant to reduce their lending rates and increase the loan and advancers under prevailing conditions.
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