Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.

Thank You
Sri Lanka Equity Forum
Latest topics
» 100 Days are over! Government on Extra Time
Today at 8:22 am by Ryan Hudson

» esl and cfvf in current t bill and bond issues
Today at 7:48 am by hettdas

»  Singhe Hospitals IPO starts on CSE today.
Today at 4:35 am by man123

» BOC recording Rs. 20.3 b PBT-highest profit ever
Today at 2:29 am by Teller

» ASCOT Holding Planning to Sell Ascot Developments at 1.35 Billion
Yesterday at 9:39 pm by fireshelter

» Wait until next week Profit taking and month end coming
Yesterday at 9:38 pm by fireshelter

» What will happen MKT price of SEMB N & X..
Yesterday at 8:42 pm by Samindarshana

» CLPL - CLPL.W14 Will make you Surprise!!!
Yesterday at 4:50 pm by man123

» WoW! The pic is Gorgeous!
Yesterday at 2:57 pm by ranferdi

» Help on Mothers day gift ideas?
Yesterday at 2:47 pm by saracamille

» Summary of 100 days according to Colombo Stock Exchange
Yesterday at 2:20 pm by RANGANA PERERA

» Australia may need to cut interest rates, IMF warns
Yesterday at 1:34 pm by VALUEPICK

» Possible great winners in the market during next 18 months!
Yesterday at 12:58 pm by VALUEPICK

» JKH JKH: No one can't stop
Yesterday at 12:15 pm by VALUEPICK

» Making money in South Asian shares
Yesterday at 12:05 pm by VALUEPICK

» Sri Lanka Stock Market (CSE All Share) 2010-2015
Yesterday at 11:57 am by VALUEPICK

» Land slide
Yesterday at 9:42 am by shane001

» Pensioners to get new electronic identity cards
Yesterday at 9:32 am by bandulawee

» Hi my FRIENDS ......After 4 years.......
Yesterday at 9:27 am by SUSPENS

» When a good run comes, there is always SEC to shut it down
Yesterday at 8:49 am by anjelo

» JKH will it drop to Rs 200 in a week or two?
Sun Apr 19, 2015 11:24 pm by man123

» Will reef w19 move up
Sun Apr 19, 2015 11:02 pm by hasarel

» Kalpitiya Resort (CITK) more good news to come, so keep on eye, there will be a annoucement after 8th of May after AGM
Sun Apr 19, 2015 10:53 pm by hasarel

» No panic.....
Sun Apr 19, 2015 10:12 pm by piras

» AEL is on the rise
Sun Apr 19, 2015 10:10 pm by piras

» Did you receive?
Sun Apr 19, 2015 10:09 pm by piras

» SEYB X. Again hit @ 64.50
Sun Apr 19, 2015 10:09 pm by piras

» ASIY at current prices
Sun Apr 19, 2015 10:06 pm by piras

» CALF Collection
Sun Apr 19, 2015 8:36 pm by indi009

» PLZ Help........ me.
Sun Apr 19, 2015 7:38 pm by vimasanno

Sun Apr 19, 2015 6:02 pm by Senior Citizen

» This Week on the Frontiers: China Splashes Out
Sun Apr 19, 2015 11:28 am by VALUEPICK

» Ireland coupling with China’s beef train at just the right time
Sun Apr 19, 2015 11:26 am by VALUEPICK

» LBT Section To Be More Eye Catching
Sun Apr 19, 2015 8:32 am by Senior Citizen

» Free Classifieds for Sri Lanka Equity
Sun Apr 19, 2015 7:14 am by Quibit

» ASPI clears 7,000-point barrier after three weeks
Sun Apr 19, 2015 5:56 am by VALUEPICK

» Export sector rebounds in 1Q
Sun Apr 19, 2015 5:51 am by VALUEPICK

» Tea,rubber guaranteed price loss Rs 16.4 billion yearly
Sat Apr 18, 2015 10:59 pm by Teller

» GSF there is a possibility for Sub division of shares bcoz the total amout of share is 25 million, so keep on eye.
Sat Apr 18, 2015 5:43 pm by soileconomy

» Will AAF reach 2.50 ??????? Chairman hold 5 million shares for long time but suddenly he bought another 45 million share with the average price of 1.95, so he knew some future development about AAF, isn't it ???
Sat Apr 18, 2015 5:23 pm by Teller

» Quibit plz help me , Market is going up......!!!
Sat Apr 18, 2015 4:20 pm by nimantha80

» DirectFN Software for Iphone
Sat Apr 18, 2015 1:36 pm by Teller

» Sri Lanka's 'Father of Insurance' Chandra Schaffter's Son - Prakash to 'Rob' Sri Lanka Cricket and Local Cricketers' Funds via Janashakthi Insurance Policies, International Cricket (ICC) to Investigate on the matter - Analysts
Sat Apr 18, 2015 1:34 pm by worthiness

» Kenya comes to the aid of tea stocks
Sat Apr 18, 2015 11:01 am by VALUEPICK

» Palm Oil Indonesia Update: Futures May Touch 6 Year Low in 2015 | Indonesia Investments
Sat Apr 18, 2015 10:57 am by VALUEPICK

» Bumper crops hardly a blessing
Sat Apr 18, 2015 10:50 am by VALUEPICK

» South Asia, now the fastest-growing region in the world, could take greater advantage of cheap oil to reform energy pricing
Sat Apr 18, 2015 9:57 am by VALUEPICK

» Surprise Rate Cut another benefit to 'Bond Manipulating' Arjun Aloysius and Arjun Mahendran fame - Opposition and Sri Lankans should ask for Central Banking Mahendran Manipulator to quit - Analysts
Sat Apr 18, 2015 2:10 am by StockGuru

» My Portfolio
Fri Apr 17, 2015 10:45 pm by

» Conflict of Interest in Sri Lanka Cricket with Janashakthi Group as Insurer: Since Ranil's appointment of Prakash Schaffter to Cricket Board as Secretary - ICC moves to investigate government interference at Sri Lanka Cricket
Fri Apr 17, 2015 8:56 pm by StockGuru

» ESL on Hot
Fri Apr 17, 2015 7:18 pm by Aubrey Perera

» GSF real buying value by DDFC
Fri Apr 17, 2015 4:13 pm by Teller

» CFVF- Dividend ?
Fri Apr 17, 2015 3:33 pm by D.G.Dayaratne

Fri Apr 17, 2015 12:35 pm by D.G.Dayaratne

» Market is getting better
Fri Apr 17, 2015 12:27 pm by D.G.Dayaratne

» GSF warming up as i described earlier
Fri Apr 17, 2015 12:08 pm by dumifer

» Sri Lanka's economic growth is expected to drop to 6.9 percent - World Bank
Fri Apr 17, 2015 11:36 am by tombond1986

» SFS will also ready for run. Wait and see............................
Fri Apr 17, 2015 10:46 am by tombond1986

» Tess Agro TESS.N
Fri Apr 17, 2015 10:32 am by NewBorn

» AAF is warming up ???? see 1.3 million buyers at 1.70 , Last week no buyers at 1.70.
Fri Apr 17, 2015 10:29 am by tombond1986

» SIRA selling pressure
Fri Apr 17, 2015 9:54 am by EquityChamp

» CFVF.N is going up..??
Fri Apr 17, 2015 9:36 am by Dhehan

» What to buy today ??
Fri Apr 17, 2015 9:05 am by kassachandi

» What is the expected price of AAF after 1st finacial statement ??????
Fri Apr 17, 2015 8:18 am by tombond1986

» think a minute
Fri Apr 17, 2015 7:16 am by dow

» Rate Changes
Thu Apr 16, 2015 11:00 pm by kumarweerarathne

» Can market beat the Political uncertainty and surge ahead?
Thu Apr 16, 2015 3:28 pm by EquityChamp

» April dull,loz
Thu Apr 16, 2015 3:22 pm by EquityChamp

Thu Apr 16, 2015 1:13 pm by worthiness

Thu Apr 16, 2015 12:22 pm by man123

» JKH today Foreign buy
Thu Apr 16, 2015 12:21 pm by man123

» SIRA......
Thu Apr 16, 2015 12:20 pm by man123

» watch Hydro power sector
Thu Apr 16, 2015 12:09 pm by sureshot

» Is this Signal Advertisement...???
Thu Apr 16, 2015 12:05 pm by sureshot

» Muthoot Finance's Profit after tax is more than JKH profit. I think this is a good time to collect AAF. I don't know about the future development of AFF but definetly  Mr. Nanayakkara (Chairman of AAF)  knew about the inside story, thats y he colleted 45M
Thu Apr 16, 2015 11:54 am by tombond1986

Thu Apr 16, 2015 10:14 am by bandulawee

» Please help me quibit
Thu Apr 16, 2015 9:44 am by Quibit

» ආයෝජකයින් මවිත කරමින් PARQ ඉහලටම
Thu Apr 16, 2015 9:32 am by Market.Watch.

» Focus on China
Thu Apr 16, 2015 6:34 am by Vptilak

» Chinese naval ships to use Pakistan port after Sri Lanka refusal - report
Thu Apr 16, 2015 5:08 am by Octopus

» Sri Lankan workers at Port City project face bleak holiday season due to work stoppage
Thu Apr 16, 2015 5:02 am by Octopus

» ශ්‍රී ලංකාවේ අනපේක්ෂිත පොලි අනුපාත කැපීම ඔස්සේ, කොටස් සති තුනක ඉහලම අගයක - Lanka Business Today
Thu Apr 16, 2015 4:25 am by StockGuru

Thu Apr 16, 2015 2:49 am by StockGuru

» Demand for over 3 million John Keells Holdings (JKH) stocks
Thu Apr 16, 2015 2:32 am by sisira.wijeweera

» CAFL De-listing and CARG BANK Listing in the market
Thu Apr 16, 2015 12:57 am by Gainer

» Sri Lanka cuts policy rates: Inflation declines due energy price revision and consumer items:Central Bank
Wed Apr 15, 2015 10:09 pm by Gainer

» SIRA warming up
Wed Apr 15, 2015 10:04 pm by Lstyle

» Forum reeling.
Wed Apr 15, 2015 9:39 pm by nimantha80

» ASCO price in short term
Wed Apr 15, 2015 9:33 pm by nimantha80

» look at the board
Wed Apr 15, 2015 2:37 pm by piras

» Bairaha...?
Wed Apr 15, 2015 1:56 pm by zy

» How to Remove CDS Account & Broker
Wed Apr 15, 2015 1:39 pm by draganz

» Is 15th market holiday?
Wed Apr 15, 2015 1:34 pm by nimantha80

» 2015 දකුණු ආසියානු ආයෝජන සමුළුව අප්‍රේල් 26 සිට 28 දක්වා
Wed Apr 15, 2015 11:27 am by sisira.wijeweera

» May New Year Bring Peace & Happiness
Wed Apr 15, 2015 10:41 am by worthiness

» There is a high chance that AAF will be renamed as Muthoot Finance
Wed Apr 15, 2015 10:16 am by tombond1986

Wed Apr 15, 2015 9:17 am by piras

Tue Apr 14, 2015 6:36 pm by Senior Citizen

» China Junk Bonds Pose Most Risk Since ’04 on Credit-Quality Dips
Tue Apr 14, 2015 1:23 pm by VALUEPICK


Online Petition - SEC Chairmanship


View results

April 2015

Calendar Calendar

Forum Rules & Guidelines
Sri Lanka Equity Analytic

The information contained in this forum have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein. its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever.

Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.

Sri Lanka bank liquid assets shrink amid peg defence

View previous topic View next topic Go down

Sri Lanka bank liquid assets shrink amid peg defence

Post by monash on Sat Jan 28, 2012 11:28 pm

Jan 28, 2012 (LBO) - Liquid assets in Sri Lankan banks are falling and loan to deposit ratios are deteriorating, with some banks reaching 100 percent, Fitch Ratings Lanka said as authorities continued to defend a dollar peg creating a liquidity crunch.
Fitch said in an report on the outlook on Sri Lankan banks that loan to deposit ratios of some banks with "less mature deposit franchises" are approaching 100 percent.

Loan to deposit ratios have risen from about 77 percent by end-2010 to 80 percent by June 2011. By September loan to deposit ratios of banks tracked by Fitch had risen to 90 percent.

Sri Lanka's Central Bank started to defend a dollar peg actively from around July by selling foreign exchange to banks in return for rupees as credit growth picked up and put pressure on a dollar soft peg.

The foreign exchange interventions caused liquidity shortages, forcing rates up, even though there has been no formal raising of policy rates.

Fitch said deposit rates have risen and bank net interest margins were shrinking.

To prevent rates rising further, the Central Bank offset or 'sterilized' interventions in the forex market by purchasing Treasury bills including from banks and injecting liquidity (printing money) in to money markets.

The liquidity fuels new credit, triggering fresh imports, resulting in further reserve losses, creating a vicious cycle of expansionary sterilized interventions.

Balance of payments crisis are a problem associated with so-called 'soft-pegged' central banks which try to target an exchange rate and then also tries to control interest rates by printing money.

Fitch said banks have been selling down liquid assets held largely in the form of government securities which are gradually channelled into lending, though lenders have to keep at least a 20 percent liquid asset to total liabilities ratio to meet regulations.

The Central Bank held 180 billion rupees of Treasury bills in its domestic asset portfolio by January 2012 from near zero in July 2011 as balance of payments pressure gathered pace.

Banks are now paying as much as 12 percent or more for customer deposits but 3-month Treasury bills yield as little as 8.67 percent and 12-month bills only 9.30 percent creating an incentive to get rid of Treasuries.

LBO's economics column warned over five months ago that banks were not raising enough deposits to fund rising credit growth and that the country was heading towards a balance of payments pressure and rates have to be allowed to move up fast to prevent the peg breaking.

"There is a persistent imbalance between loans made and deposits raised by the banking system, indicating that a market clearing interest rate is needed to maintain the peg to the US dollar," LBO's economics columnist fussbudget warned in August.

"To head off any 'balance of payments' problem the central bank has to weaken the rupee or allow interest rates to go up. If neither happens, credit expansion is on track to crash land in the balance of payments."

When banks raise deposits consumption is curbed (reducing pressure on the forex market) and only that 'demand' is released as credit.

But when Treasury bills are sold to the Central Bank, newly printed money is expansionary generating new aggregate demand and pressure on the peg through imports.

"Deteriorating loan to deposit ratios and declining liquid assets demonstrates in practice how this phenomenon works through the balance sheets of banks," LBO's economics columnist fuss-budget says.

"It is also interesting to note that the decline in liquid assets is the first step of how a currency crisis transforms into a banking crisis.

"The emerging trends in the banking system should be carefully noted and not forgotten so that interest rates are allowed to move up in the future without delay so as to head off episodes to balance of payments pressure as soon as credit growth becomes too strong."

A fully fledged banking crisis happens when interest rates rise and remain at levels for long enough so that it no longer makes sense for businesses to borrow and they start to default and bad loans mount.[b]

Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Posts: 334
Points: 1936
Reputation: 16
Join date: 2011-01-22

Back to top Go down

Re: Sri Lanka bank liquid assets shrink amid peg defence

Post by Antonym on Sun Jan 29, 2012 12:10 am

This is a concern, folks... It looks like CBSL will need to depreciate the rupee sooner or later.
Do you think foreign funds will hold back equity purchases in anticipation of another devaluation?

Vice President - Equity Analytics
Vice President - Equity Analytics

Posts: 1034
Points: 3077
Reputation: 272
Join date: 2011-02-09

Back to top Go down

View previous topic View next topic Back to top

- Similar topics

Permissions in this forum:
You cannot reply to topics in this forum
Who is online?
In total there are 128 users online :: 12 Registered, 0 Hidden and 116 Guests

BH, BullandBear, Daniel260476, hariesha, hettdas, Invest_Wisely, poshkid, raider, Ryan Hudson, sisira.wijeweera, Vptilak, wallstreetguy

[ View the whole list ]

Most users ever online was 541 on Mon Sep 19, 2011 11:29 am
We have 12439 registered users
The newest registered user is quitedorr

Our users have posted a total of 253444 messages in 38717 subjects