The latest data from the Central Bank of Sri Lanka (CBSL) reveals a 4.5% quarter-on-quarter (Q-o-Q) decline in the liquidity of the country’s banking sector by the end of September, with a significant 14.5% drop in the first nine months of 2023. The October monthly report indicates that liquidity, which was at Rs. 214.8 billion at the end of Q2, further decreased to Rs. 205.5 billion by September.
The report highlights a noteworthy increase in call market borrowings during the last week of the month, reaching Rs. 41.7 billion by the end of Q3, compared to Rs. 21.48 billion in Q2. Despite this, the banking sector’s total assets/liabilities rose to Rs. 1.87 trillion by September from Rs. 1.78 trillion in June, even as there was a 10.7% decrease since the end of 2022.
Notably, investment in Treasury Bills by the banking sector witnessed an 11.8% increase (Q-o-Q), reaching Rs. 1.46 trillion by the end of the third quarter, up from Rs. 1.29 trillion in June. This represents a substantial 57.3% surge in Treasury Bill investments over the first nine months of 2023.
Furthermore, the banking sector experienced a significant rise in total deposits during Q3, totaling Rs. 12.74 trillion—an increase of about Rs. 500 billion compared to the end of 2022 when total deposits stood at Rs. 12.07 trillion.
As of the end of the third quarter, the total outstanding loans and advances in the banking sector amounted to Rs. 8.09 trillion, a slight increase from Rs. 7.95 trillion recorded at the end of the second quarter.
