Sri Lanka’s banking sector recorded one of the highest non-performing loan (NPL) ratios in Asia in 2024, reflecting ongoing financial sector stress and structural challenges following the economic crisis, according to a report by the Asian Development Bank (ADB).
The report noted that while the total value of non-performing loans rose to around 4.58 billion US dollars on average, the NPL ratio increased sharply to 12.9 percent by the first half of 2024. This marks a significant jump from the 4.5 percent reported in 2021, making it the highest rate among Asian economies analyzed by the ADB.
By the end of 2024, Sri Lanka’s NPL ratio stood at 12.3 percent, ranking second in South Asia, behind Bangladesh at 21.3 percent and ahead of Pakistan at 8.4 percent. At that time, Bangladesh’s banking sector recorded 28.35 billion US dollars in non-performing loans, compared to Sri Lanka’s 4.68 billion US dollars.
Encouragingly, Sri Lanka’s NPL ratio showed slight improvement in early 2025, easing to 12 percent by the end of the first quarter.
