ICARE 2018

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    Non - Interest Income and Performance of Commercial Banks in Sri Lanka
    (4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Karunarathne, W.G.S.M.; Aruppala, W.D.N.
    Non interest income of banks improve the total income, since banks can expand the source of income by diversifying their income while reducing business risks. Accordingly, non-interest income is an extra source of income for commercial banks which is essential to enhance their profitability. ATM technology, personal lending and loan quality are among the main microeconomic factors driving the performance in non-interest income in the commercial banking sector. This study investigated impact of non-interest income on bank performance in case of licensed commercial banks in Sri Lanka for the period of 2007 to 2017. 26 licensed commercial banks were selected as sample of the study. The study conducted based on secondary data which was collected from audited annual reports and published database of the Colombo Stock Exchange and data analyzed by using E-Views statistic software. The results reveal that relying on non-interest income activities may adversely affect bank performance. Findings suggest that only a small proportion of banks present an increase in efficiency level with inclusion of non-interest income, while no significant changes are seen on most banks’ efficiency levels. Also, further finds that the relationship between the share of non-interest income to the net operating revenue and the bank efficiency score is not significant
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    The Study on Determinants of Non-Performing Loans in Listed Commercial Banks in Sri Lanka
    (4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Adikari, A.M.U.S.,; Rathwatha, G.M.H.P.K.
    Non-performing loans (NPLs) are considered as a critical factor for any bank and has the possibility of resulting huge losses if the required attention was not given. Though many researches have been conducted on factors affecting to NPL, this is still an open area for further studies. This study investigates determinant factors of Nonperforming loans (NPLs) in Sri Lankan banking sector. The survey has been conducted with a sample of 10 license commercial banks in Sri Lanka over the period of 2008 to 2017. This study focuses on the impact of bank specific factors on NPLs. Non-performing loan rates are measured through the gross NPL ratio published by banks and bank specific factors considered are Operating Expense to Income (OEI), Net Income to Total Assets (NITA), Loans to Total Assets (LTA), Loan Growth (LG), and Natural Logarithm of Size of Bank (NL). GDP growth rate (GDP) and Lending Rate (LR) have been considered as controlling variables in this study. The panel regression model has been applied to determine different bank specific factors that affect to NPL. During the study it was revealed that there is a positive correlation between loan to asset ratio and NPL rate while loan growth rate, size of the bank, operating expense to income, net income to total assets show a negative correlation with NPL rate