Private sector borrowing from Sri Lanka’s banking system rebounded in September from a four-month low recorded in August, even as annual credit growth slowed for a third consecutive month.
Central Bank of Sri Lanka figures released on 6 November showed that net credit expanded by Rs. 212.4 billion month-on-month, pushing total outstanding private sector credit to Rs. 11.77 trillion from Rs. 11.56 trillion in August.
The month-on-month expansion was led primarily by rupee-denominated lending via Domestic Banking Units, which increased by Rs. 171.8 billion to reach Rs. 11.17 trillion.
Credit extended by Offshore Banking Units handling foreign currency transactions also rebounded by Rs. 40.6 billion to reach Rs. 597.9 billion, reversing a contraction of Rs. 33.1 billion recorded in August.
Despite the monthly uptick, overall year-on-year growth in private sector credit eased to 23.6 per cent from 24.5 per cent in August and 26.4 per cent in July.
In contrast to private sector trends, net banking system credit to the government fell by Rs. 84.8 billion to Rs. 7.65 trillion, split between a Rs. 32.8 billion drop in central bank credit and a Rs. 52 billion decline in commercial bank credit.
Outstanding credit to state-owned business enterprises also contracted by Rs. 16.9 billion to Rs. 462.9 billion, while system-wide net foreign assets experienced their first monthly contraction of the year, dropping by Rs. 41.9 billion to Rs. 1.63 trillion.
