Sri Lankan bourse steady at 11-week high

May 18 Sri Lankan shares ended little-changed on Monday, hovering around their 11-week high hit in the previous session, led by illiquid large-cap stocks such as Carson Cumberbatch Plc and Bukit Darah Plc , brokers said.

The main stock index fell 0.05 percent, or 3.65 points, to close at 7,255.02, slipping from its highest close since Feb. 27 touched on Friday.

"The market is down on large-caps, but with good turnover due to local investor confidence backed by strong corporate earnings," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Monday's turnover was 1.1 billion rupees ($8.3 million), close to this year's daily average of around 1.11 billion rupees.

Foreign investors were net sellers of shares worth 28.5 million rupees on Monday, but have net bought 5.74 billion rupees in equities so far this year.

Political uncertainty due to Prime Minister Ranil Wickremesinghe-led UNP not having a parliament majority has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

The index has gained more than 5 percent since the rate cut.

Investors had been waiting for direction on the political front, analysts said, with the prime minister saying he would invite the main opposition to join government when he wins the parliamentary polls, which is yet to be scheduled.

Analysts, however, still expect the index to move sideways until the situation becomes clearer.

President Maithripala Sirisena has promised to dissolve the parliament after passing some key reforms next week.

Carson Cumberbatch shares fell 2.38 percent, while Bukit Darah fell 2.03 percent.

($1 = 133.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Prateek Chatterjee)

Sri Lanka’s DFCC and Vardhana bank to merge

May 18, 2015 (LBO) – Sri Lanka’s DFCC Bank and DFCC Vardhana Bank has applied to the Central Bank for provisional approval to merge, the banks said in a joint filing in the Colombo Stock Exchange.

The statement said, the decision was made by the board of directors of DFCC and DVB after due consideration that it would be in the best interest of both banks, its shareholders and other stakeholders to amalgamate DFCC and its 99.2 percent owned subsidiary, DVB, and continue their activities as a single legal entity which is a licensed commercial bank.

“Upon receiving the approval of the Central Bank in principal, the banks will embark on the steps that have to be taken to complete this amalgamation and submit the amalgamation proposal for the approval of the shareholders of the two banks as required by the Companies Act,” the statement said.

This was following the recent termination of merger process of DFCC, Vardhana and NDB.

Sampath Bank ups 1Q pre-tax profit by 28.5% to Rs. 2.1 b

Sampath Group has recorded an impressive pre-tax profit of Rs. 2,341 m, with a YoY growth of 32% for Q1 ending 31 March 2015, in the backdrop of very challenging and volatile circumstances. 

The post-tax profit of the Group for Q1 2015 was Rs. 1,579 m, a growth of 23.7% as compared to Rs 1,277 m achieved in the corresponding period in 2014.

Sampath Bank, as the main entity of the Group, also achieved a significant pre-tax profit growth of 28.5% in the 1st quarter of 2015, amounting to Rs. 2,143 m compared with Rs. 1,668 m recorded in the first quarter of 2014. The post-tax profit of the bank during Q1 2015 was Rs. 1,431 m, as compared to Rs. 1,200 m achieved in the corresponding period in 2014.

“Proactive strategies adopted by the bank in driving fee based income, prudent credit control and effective assets and liability management helped to deliver these results,” Sampath Bank said in a statement.

Continuous shrinking of Net Interest Margin (NIM) very adversely impacted on the Net Interest Income (NII) of the banking industry and Sampath Bank was no exception to this trend.

Nevertheless, NII of the bank recorded a marginal increase of Rs. 79 m during the period under review from Rs. 3,968 m in Q1 2014 to Rs. 4,047 m in Q1 2015, aided by the significant expansion of the fund-base of the bank since Q1 2014.

The bank’s net fee and commission income for the quarter stood at Rs. 892 m, which was a growth of 19% compared to the first quarter of 2014. Growth of business volume such as card operations and trade related services were the main contributory factors.

Mark to market losses sustained on the existing portfolio of Treasury Bills, due to the increase in market interest rates on new Bills and drop in share prices in the Colombo Stock Exchange during the latter part of the quarter were the main reasons for the negative growth of Rs. 611 m reported in Net Trading Income.

However, the bank achieved a remarkable growth in Other Operating Income, which recorded an increase of Rs. 841 m from Rs. 401 m in the first quarter of 2014 to Rs. 1,242 m in the first quarter of 2015. The major contributory factors for this increase were exchange gains from revaluation and charges recovered.

Operating expenses of the bank which stood at Rs. 2,769 m for the first quarter of 2014 increased to Rs. 3,190 m in 2015, reflecting a growth of 15%. This was mainly due to general price increases and increase in staff numbers coupled with salary increments given to the staff members during the second quarter of the previous year.

The bank’s continuous efforts to reduce its exposure to gold backed loans (pawning) in order to manage risk related to adverse fluctuations in gold prices in the international markets was the main reason for the reduction in collective impairment provision by Rs. 390 m.

Further, the bank’s continuous effort to improve the credit quality of the loan portfolio which was evidenced by improvement in the gross non-performing ratio to 1.84% as at 31 March 2015 as against 2.38% as at 31 March 2014 and 1.93% as at 31 December 2014, also resulted in a lesser charge of individually significant impairment, which amounted to Rs. 107 m in Q1 2015, compared to Rs. 283 m in Q 1 2014.

Business growth: Total deposits recorded a growth of 2.3% from Rs. 342 b as at end 2014 to Rs. 350 b as at 31 March 2015. The bank’s total gross advances also increased marginally by 2.2% from Rs. 311 b as at 31 December 2014 to Rs. 317 b as at quarter end. Total assets which stood at Rs. 439 b as at 31 March 2015 too reflected a similar trend by recording a 1.5% growth over the figure reported as at end of 2014.

Performance ratios: The strong financial performance in Q1 2015 enabled the bank to post healthy improvements in key performance indicators. Accordingly, ROA (after tax) and ROE (after tax) improved to 1.33% and 18.73% respectively in 1Q 2015 compared to1.28% and 16.78% in Q1 2014.

Earnings per share for Q1 2015, which stood at Rs. 8.52, was a growth of 19%, compared to Rs. 7.15 for the corresponding quarter in 2014. Statutory liquid asset ratio stood at 22.83% which was above the mandatory requirement of 20%. The CASA ratio exceeded 48% in March 2015, compared to 47% in December 2014.

Capital adequacy ratios: The bank managed to maintain its capital adequacy ratios, Tier 1 (8.27%) and Total (12.78%) well above the minimum regulatory requirements of 5% and 10% respectively, However Tier I and Total capital adequacy ratios have dropped by 0.56% & 0.84% respectively compared to 31 December 2014, mainly due to the credit growth mentioned above and cash dividend payment of Rs. 840 m in respect of 2014.

Sampath Bank will continue to improve its service quality with improved efficiency coupled with innovation. Further, as a premier responsible corporate citizen in Sri Lanka, Sampath Bank is continuing to focus and invest in development projects in vital areas of the country’s economy, such as education, environment, community based developments, etc.

Sampath Bank has been honoured with the ‘Technology Development and Application through Local Partnerships Award’ in recognition of online corporate financial platform for its in-house developed ‘Sampath Vishwa Corporate’ at the National Awards for Science and Technology Achievements (NASTA). Further, Sampath Bank was awarded the Runner Up in the Banking Sector at the ACCA Sustainability Reporting Awards 2014, organised by the Association of Chartered Certified Accountants (ACCA).

In the rating assessment for 2014, considering the healthy asset quality, better compliance, transparency, capital adequacy, internal control systems and processes of the bank, Fitch Rating Lanka Ltd. reaffirmed Sampath Bank PLC’s long term rating as ‘AA-(lka)’, with stable outlook and Lanka Rating Agency reaffirmed ‘AA’ rating with stable outlook. Further Fitch Rating Lanka Ltd. has assigned a credit rating of ‘A + (lka)’ to Sampath Bank’s Debentures issued in December 2014.
www.ft.lk

Vidullanka adds 8th mini hydro power project; now produces 16.75 MW

Vidullanka Plc has completed its eighth mini hydro power project last week, bringing the total renewable energy produced by the Group to 16.75 MW.

It said the construction of the 1.75 MW Rideepana Mini Hydro Power Plant in Andeniya, Badulla, was successfully completed and was commission to the national grid on 15 May.

The latest project for which an investment of Rs. 20 million was made is owned by Rideepana Hydro Ltd., a wholly-owned subsidiary of Vidullanka Plc.

In June last year, Vidullanka PLC commissioned its seventh mini hydro power plant in Kotmale, Nuwara-Eliya with the installed capacity of 4 MW. The project company, Lower Kotmale Minihydro Ltd. is a joint venture between Vidullanka PLC and the consortium of investors led by Jaywise Constructions Ltd.

Vidullanka’s mini hydro portfolio includes Bambarabatuoya (3.2 MW), Batathota (2 MW), Ganthuna (1.2 MW), Haloya (800 kW), Wembiyagoda (1.3 MW), Madugeta (2.5 MW), Lower Kothmale Oya (4 MW) and Rideepana (1.75MW). The Group is also planning its first overseas project to produces 6.5 MW via a fully owned subsidiary in Uganda.

The first biomass power generation project of Vidullanka with 2.5MW installed capacity will be located in Diyaviddagama, Dehiattakandiya and is expected to be grid connected during 2015/16 Financial Year.

A BOI approved company founded in 1997, Vidullanka constructs and operates hydroelectric power projects. It was the first power company to be listed in the Colombo Stock Exchange. A fully-owned subsidiary Vidul Construction Ltd. specialises in designing and construction of mini-hydro power projects.

Vidullanka Plc also owns a 10% stake in Panasian Power PLC.

High net worth but low profile investor Dr. T. Senthilverl is the largest shareholder in Vidullanka Plc with a 29.6% stake. 

www.ft.lk