Tuesday Mar 24, 2026
Tuesday Mar 24, 2026
Monday, 23 March 2026 03:33 - - {{hitsCtrl.values.hits}}
CT Smith Securities has warned that a prolonged conflict in the Middle East could have a negative impact on Sri Lanka’s banking sector, particularly through pressure on non-interest income.
In a sector update, the firm said income streams such as remittances and trade finance are likely to weaken given Sri Lanka’s reliance on Middle East inflows and the disruption to trade routes passing through conflict-affected regions.
It noted that income from trade finance and letters of credit (LCs) could come under pressure as global supply chain disruptions intensify.
CT Smith also said that a potential uptick in inflation could limit the likelihood of a Central Bank policy rate reduction in the near term, although market interest rates may increase in the short term despite prevailing liquidity conditions.
According to the President’s Media Division, the Central Bank of Sri Lanka (CBSL) has estimated the potential impacts of the Middle East conflict on the economy based on various scenarios, but did not disclose details. Central Bank officials had also briefed the Parliamentary Committee on Public Finance (CoPF) last week. The Central Bank will release its second Monetary Policy Review for 2026 this week Wednesday (25).
