The rapid growth in profits also resulted in considerably higher return on equity (after tax), which improved to 25.8 % 3 from 20.3% in CY04. (ii)  Falling NPLs to loans and net NPLs to net loans ratios improved to 8% 4 and 2.1% 5 in CY05 respectively.
(iii)  With strong profits, declining NPLs and fresh capital injections, the solvency position of the banking system strengthened further. Capital adequacy ratio (CAR) increased to 11.3 % 6 from 10.5 % in CY04. (iv)  Despite losing some momentum in FY06, the overall performance of the corporate sector, which is the major user of banks’ funds, remained satisfactory.