The sector-average non-performing loan (NPL) ratio rose to 2.2% in 3M2024 from 1.9% in 2023, driven by retail loans. Banks’ return on average assets (ROAA) improved slightly to 1.6% from 1.5% over the same period due to lower credit costs and wider net interest margins (NIM). Bank profitability will continue to improve in 2024 as robust domestic operating conditions and low interest rates drive stronger borrower debt serviceability and wider NIMs. Funding and liquid resources will remain stable with deposit growth matching credit growth and banks increasing longer-term funding.
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