Sri Lanka to exempt power, water from VAT: minister

ECONOMYNEXT - Sri Lanka will not charge value added tax from power and water but telecom and health and education services will be charged, ministers said.

State minister for finance Lakshman Yapa Abeywardene said a decision had been taken to exempt water and telecom.

Private health services will be charged VAT but drugs will be exempted.

Private education services will also be charged VAT.

Sri Lanka's Seylan Bank to sell up to Rs5.0bn debt

ECONOMYNEXT - Sri Lanka's Seylan Bank Plc said it will sell up to 5.0 billion rupees in listed debt with tenors of 5 and 7 years.

The lender said in a stock exchange filing that its board has approved the issue of 3.0 billion rupees of debt with an option to sell another 2.0 billion rupees.

The debentures will have a coupon on 100 rupees.

The interest rates will be decided shortly before the offer is made

Sri Lanka shares end up 2nd straight session

Reuters: Sri Lankan shares rose for the second straight session on Wednesday as investors bought diversified shares such as market heavyweight John Keells Holdings Plc, brokers said.

However, trading was dull as investors turned cautious ahead of an imminent loan deal with the International Monetary Fund and uncertainty over a tax policy.

Foreign investors were net buyers of 92.4 million rupees ($631,794.87) worth of equities on Wednesday, but were net sellers of 3.05 billion rupees worth of shares so far this year.

The benchmark stock index ended up 0.55 percent at 6,423.13, its highest since Feb. 2.

"We have not seen any serious buying coming in. It's retail and speculative buying. Everybody is still waiting to see the direction on the tax implementation and the IMF deal," a stockbroker said requesting not to be named.

Sri Lanka will raise value added tax (VAT) to 15 percent from 11 percent on May 2, a treasury official said last week, as the island nation reaches the final stages of negotiating an IMF loan.

Clarifying a contradictory statement by President Maithripala Sirisena, the junior finance minister on Wednesday said the government has exempted some sectors to ease the indirect tax burden.

High interest rates and lower-than-expected earnings in the March quarter dented investor sentiment.

The 14-day relative strength index ended at 74.059 on Wednesday, compared with Tuesday's 71.893, Reuters data showed. A level between 70 and 30 indicates the market is neutral.

Turnover stood at 577.4 million rupees, less than this year's daily average of 783.4 million rupees.

Shares in John Keells Holdings Plc rose 1.97 percent while Ceylon Tobacco Company Plc gained 0.73 percent.

The markets will be closed on Thursday for a Buddhist religious holiday and will resume trading on Friday. 

($1 = 146.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Sri Lanka 03-month T-bill yield steady at 8.45-pct

ECONOMYNEXT – Sri Lanka’s three month Treasury Bill yield was steady at 8.45 percent at this week’s auction compared with last week, the public debt department of the central bank said.


The six-month T-bill yield edged down one basis point to 9.53 percent while the one-year bill yield rose 17 bp to 10.17 percent, it said.

It got bids worth 59.6 billion rupees and accepted bids of 32.9 billion rupees.

DFCC Bank launches Vardhana Virtual Wallet

DFCC Bank PLC has introduced an innovative mobile payment solution,Vardhana Virtual Wallet which is equivalent to having cash in hand.

Owned and operated by DFCC Bank and developed by Synapsys, the Vardhana Virtual Wallet is a digital application that can be downloaded onto a mobile device, connecting consumers to merchants and other consumers. This solution enables users to send and receive electronic cash, thus simplifying their shopping experiences and helping them to stay in control of their finances. Its many uses include purchasing goods and services, paying utility bills, transfering funds between Wallets, withdrawing cash and topping up cash from designated merchant outlets or from the Bank account linked to the Wallet. All these features could be accessed while on-the-go from a data enabled mobile device. Funds can be maintained in the Virtual Wallet to conduct transactions, eliminating the need to carry any other payment instrument.

This product also has great benefits for merchants regardless of their scale or scope of operation, as mobile payments is a fast growing trend. Some of the benefits include reduction of operating costs, the ability to earn attractive commission income and the ability to create a consumer-centric shopping experience may it be at the merchant's premises or at the door step of a consumer. Thus their brand proposition is further enhanced.

DFCC Bank CEO Arjun Fernando said DFCC Bank has evolved and diversified to meet the changing needs of customers and the nation. Our progress and achievements have resulted in many firsts, and the introduction of the Virtual Wallet is a financial inclusion enabler and yet another first in the country's banking industry.”

The Bank's personal account holders need to only submit a duly completed form and on receiving confirmation from the bank, may download the Vardhana Virtual Wallet digital application to their device from Apple iStore or Android Play Store. Further assistance can be obtained by calling DFCC's customer care hotline. On activation of the Virtual Wallet, the user can login with the registered credentials and start using the Wallet to experience its sheer convenience. Merchants also can register in the same manner, where they can additionally login through a mobile connection or PC and laptop connected to the Internet depending on the nature of their business.

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Ceylinco Life stronger at end of challenging 2015

Life insurance market leader Ceylinco Life ended 2015, a year it describes as one of ‘unusual challenges,’ with a characteristically strong performance that kept it at the top for the 12th successive year. Managing Director and CEO R. Renganathan elaborates on the company's performance.Excerpts of the interview.

Q: Ceylinco Life is now a standalone life insurance company following the segregation of life and general insurance by law. How has this affected your business

A: Our business is as strong as ever! We have the same products, the same sales team, the same senior executive team, and above all, the same passion, commitment and professionalism that made us the number one life insurer in Sri Lanka in 2004, a position we have defended and strengthened for the past 12 years. Ceylinco Life is one of Sri Lanka's most powerful and trusted brands, and will remain so. The segregation of life and general insurance has no adverse impact on how we operate as a business. In fact we were always in favour of the segregation.

Q: Does your financial performance in the last year support this assertion

A: The figures speak for themselves. Ceylinco Life ended 2015 with total income of Rs 19.89 billion, a growth of 7 per cent. Of this, premium income accounted for Rs 13.4 billion, making the company the largest life insurer in the market for the 12th consecutive year. The growth in premium income was more than 12 per cent, which is very satisfactory. We recorded net profit of Rs 2.060 billion for the year and transferred Rs 1.8 billion to shareholders.

Q: How did the company's investment income grow in the last financial year

A: Investment and other income remained flat at Rs 6.74 billion, which is not surprising in the context of the interest rates in effect. However, Ceylinco Life's investment portfolio increased by a solid 17.35 per cent in value to Rs 67.1 billion, while total assets grew by a noteworthy Rs 9.1 billion or 12.9 per cent to Rs 80.2 billion. We pay a lot of attention to the prudent management of our investment portfolio, which is one of the strengths of the company.

Q: What sectors are your funds invested in

A: At the end of 2015, we had invested more than half of our funds, 53 per cent to be precise, in Government Securities. The rest of the investment portfolio comprised of Licensed Private Banks -18 per cent; State Banks - 2 per cent; Real Estate - 7 per cent; Corporate Debt - 19 per cent and Others (1 per cent). These investments are made in conformity with the investment guidelines stipulated under the Regulation of the Insurance Industry Act No 43 of 2000 and are subject to regular monitoring by the Insurance Board of Sri Lanka.

Q: How did your Life Fund grow in 2015

A: Our Life Fund posted net growth of Rs 7.99 billion to reach Rs 68.01 billion at the end of 2015. This represents a growth of 13.31 per cent. Ceylinco Life was, in fact, the fastest company in the local life insurance industry to reach a Life Fund of Rs 60 billion, a feat we achieved in 2014.

Q: What kind of growth did the company achieve in new business in the last year

A: We sold 170,007 new policies in 2015 averaging 14,166 a month, which is quite satisfactory in the context of the conditions that prevailed. Sales of retirement plans grew by a noteworthy 30% per in 2015, which is something we are most pleased about. Overall, 2015 was a tough but memorable year for the company, particularly because we achieved our results in the face of unusual challenges, including an attempt to take over the company, which we were able to overcome without losing our focus on operational performance. Our 2015 results can therefore be viewed as a measure of the company's strength and resilience, and its unwavering attention to business fundamentals.

Q: How did policyholders benefit from the company's success

A: Benefits to policyholders totalled Rs 5.9 billion in 2015, which was a 21.7 per cent improvement over the previous year. This included ‘Avurudu cash’ bonuses to more than 14,000 policyholders apart from the Rs 2.9 billion in annual bonuses declared. The annual bonus pay-out in 2015 was the highest in Ceylinco Life's history, and surpassed the previous year's by Rs 500 million.

Q: So it would appear that Ceylinco Life emerged stronger in many aspects at the end of 2015

A: There is a lot of truth in the saying ‘That which does not kill us, makes us stronger.’ The challenges we faced did not deter our performance, and we certainly did end the year stronger than when we began it. One indicator of the strength of an insurance company is its solvency ratio, which is computed on the basis of admissible assets over total liabilities. Ceylinco Life maintained its solvency ratio at eight times the legal requirement in 2015.

The solvency margin is one of the most important key performance indicators for a life insurance business because it represents a company's ability to meet the obligations arising from its life insurance contracts. The prevailing insurance regulations require insurance companies to maintain a solvency margin of not less than 5 per cent of their statutory liabilities at all times.

Q: Any other memorable achievements in 2015

A: There were several. One of them was the reaffirmation by World Finance, the respected UK-based magazine, of Ceylinco Life as the ‘Best Life Insurance Company in Sri Lanka’ for a second consecutive year. This followed an in-depth assessment of key performance indicators. (VW)

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Taprobane Holdings makes profits

Taprobane Holdings made a turn around in the financial year ending in March 2016 by recording a profit of Rs 12.5 million when considering the previous financial year which incurred several losses.

The company resulted in making revenue of Rs. 9.9 million which is a significant growth when compared to the Rs. 711 million.

“Modest contributions from the money broking and investment in government securities, as well as a doubling of revenue from the stock broking arm also supported revenue growth.

“As interest rates trended downwards, the Group benefited from profits on bond sales and, as investors sought higher returns amid the prevalent low interest rate scenario, a keen interest was seen in the stock market, which rendered a notable improvement in revenues for the stock broking arm,” Group Chief Executive Officer Ruwan Sugathadasa said.

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