The growth momentum of the banking industry in the second quarter of 2017 was supplemented by favorable macroeconomic conditions i.e. low interest rates, strengthening aggregate demand, uptick of industrial activity and positive outlook as CPAC related projects gain steam. However, low interest rates and buildup of low yielding stock of short-term government bonds has moderated the profitability of the banking sector. The profitability of the banking sector is expected to see some recovery given anticipated increase in both advances and investments. From solvency standpoint, banks are well positioned as the prevailing CAR is well above the minimum required level of 10.65 per cent.

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