Bourse's steep fall, last seen in 2007

By Paneetha Ameresekere

Ceylon Finance Today: The bourse fell for the 11th consecutive day at yesterday's trading, beating a dubious record which it last held seven years ago in 2008 and coming close to equalling another dubious record it last made eight years ago, when it fell for 13 consecutive days, market sources told Ceylon FT.

The market fell for 10 consecutive days, that is, from 25 June to 8 July, 2008 previously. Meanwhile, the bourse fell for 13 consecutive market days, from 27 April to 17 May, 2008, seven years ago. Yesterday saw the benchmark ASPI decline by 0.44% to 7,059.98 points and the more sensitive S&P SL 20 Index by 0.31% to 4,035.54 points on a Rs 582.9 million turnover.

Meanwhile, in the 11 consecutive market days up to yesterday, shareholder wealth lost has amounted to Rs 112.4 billion, bringing down market capitalization (market cap) to Rs 2.9886 trillion. The last time market cap went under the Rs 3 trillion mark was more than a month ago on 5 February, with a figure of Rs 2.9860 trillion. The single biggest contributor to yesterday's turnover was JKH, the market's largest capitalized stock with Rs 197.7 million. But in the process JKH saw its share value decline by 0.92% to Rs 205 a share, on a share volume of 964,107. JKH is also captured on the S&P.


The only silver lining was the continuous inflows of net foreign inflows (NFIs) into the bourse, with a figure of Rs 204.2 million yesterday. This takes NFIs in the year to date to Rs 3.1 billion (US$ 23.3 million). Calculations are made on the basis that one US dollar is equivalent to Rs 132.90, in administered, interbank spot trading.
Yesterday's trading saw 49 losers as opposed to 123 gainers
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Corruption drives out FDI

Ceylon Finance Today: Corruption under the previous regime was on a continuous basis, thereby having a negative impact on foreign direct investments (FDI), a hotel investor told Ceylon FT.

The source, speaking on this subject said that one of his business partners, a Maldivian, wanted to invest in a hotel down D. R. Wijewardene Mawatha Colombo, after the war ended.

The investment figures he was looking at ranged from between US$ 100-120 million.
Then the need to pay graft came into the picture. The investor didn't mind paying that, provided it was a 'once and for all' payment, said the source.

However, it didn't take that form.

As a result this, the Maldivian closed shop and went home, he said.

The source further said that another drawback in the development of the leisure industry was the plethora of approvals that were required.

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Rupee eats up US$ 311M While CBSL lending increases to Rs 70.1B

By Paneetha Ameresekere

Ceylon Finance Today: In the midst of heavy government expenditure requirements, Central Bank of Sri Lanka (CBSL) lent another Rs 33.4 billion to the Government of Sri Lanka (GoSL) at yesterday's trading, thereby providing fodder to fuel demand side inflationary pressure on the economy which hits the poor and the fixed wage earner the hardest.

As a result, CBSL's Treasury (T) Bill holdings went up by 60.7% to Rs 70.1 billion. Lending T Bills is the key way GoSL borrows from CBSL at no interest cost.

However, in addition to GoSL's borrowings from CBSL it also borrowed another Rs 25.3 billion from the market via five auctions for the 'outright sale of T Bills.' These sales were executed at weighted average yields of a minimum of 6.5% and of a maximum of 6.78%. CBSL's current standing deposit facility is 6.5%.

In related developments, market's excess liquidity went down by a massive Rs 41.8 billion at yesterday's trading. If this was due to a mix of GoSL's foreign debt servicing commitments and CBSL's defence of the rupee (CBSL is currently preventing depreciating pressure on the rupee by administratively controlling the spot rate at Rs 132.90 to the US dollar), then this would be tantamount to Sri Lanka's foreign reserves being depleted by a massive amount equivalent to US$ 311 million.GoSL's foreign debt servicing commitments in the three months to April 2015 is envisaged at a massive US$ 1.7 billion.

Another way, where excess liquidity may be depleted under the present situation is if banks choose to keep their excess liquidity in their own vaults due to 'limits' issues or due to Treasury management.

As a result, the weighted average rate (WAR) of overnight market repo transactions went up by a massive 39 basis points (bps) to 6.61%, while the increase in the WAR of call money was more subdued at one bp to 6.70% at yesterday's trading.

Market's excess liquidity as at the end of the day was Rs 88.3 billion.
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Market adopts 'wait and see' attitude till 23 April Trading degenerates to two weeks forwards

By Paneetha Ameresekere

Ceylon Finance Today: The market is looking for direction till 23 April, 2015, the day Premier Ranil Wickremesinghe's UNP Government has said that Parliament will be dissolved, market sources told Ceylon FT yesterday.

As a result, activity in the foreign exchange (FX) market remained virtually unchanged, now touching one month, where such conditions have been prevailing, with trading, if conducted, being executed on thin volumes on seven day forwards, at Rs 133.60 to the US dollar in interbank trading under a controlled regime, they said. However, most trades were translated to two weeks forwards, with trades being executed at the Rs 133.80-134 levels, sources said.

The market has already waited for one month, now it will have to wait a further month, sources said.

It has no direction, they however said.

The 'spot' is being controlled under Central Bank of Sri Lanka's (CBSL's) moral suasion umbrella to prevent depreciating pressure at Rs 132.90.

The rupee is not allowed to depreciate for fear that such depreciating pressure would cause import prices to up, in the context that Sri Lanka is an import dependent economy. 

The incumbent government fears that such a scenario would make them unpopular, in the context that a general election is expected to be held soon, though the present Parliament has a mandate to go on up to next year.

But this has caused Sri Lanka's FX reserves to deplete by CBSL selling US dollars at a discounted price of Rs 132.90 to the market to prevent further depreciating pressure on the local currency.

However, preventing the rupee to depreciate has to be looked at in the context, that all major currencies in the world such as the euro, the sterling pound a

Such depreciations have been caused due to the recovery of the US economy, thereby making dollar assets more attractive to an investor. Hence, the appreciation of the dollar due to demand.

To make matters worse, CBSL is currently rocked by a Treasury (T) bond scandal involving names in high places and figuring appointees of the incumbent UNP regime.

As a result, secondary market trading in T bonds and T bills was also thin, sources said.
Meanwhile, 23 April is significant to the UNP in more ways than one. It was on 23 April 1993 that former UNP strongman Lalith Athulathmudali, who had turned renegade by then, due to his differences with former UNP President Ranasinghe Premadasa, was assassinated by an LTTE gunman, while addressing an election rally in Colombo.

It's on such a day that the Wickremesinghe Government is seeking a dissolution of Parliament and are calling for fresh polls, on the grounds that the UNP, which is now a minority in Parliament, may get the required majority that it seeks in the event general elections are held now.
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NSB aims for Rs. 12 b profit this year

Aggressive plans underway to expand locally and internationally

By Charumini de Silva
Marking 43 years of financial strength and stability, National Savings Bank (NSB) was optimistic of achieving a 12% growth in deposits, while aiming at a profit of over Rs. 12 billion by the end of the year, a senior official said.

Last year NSB made a profit of over Rs. 10.5 billion and with strategic plans underway, the bank was confident it could reach the set targets in 2015.

“The bank is working out some new strategies especially by focusing on the international market, IT and marketing. Aggressive plans are underway to expand the branch network locally and internationally, capturing untapped markets,» NSB Chief Executive Officer and General Manager Dhammika Perera told the Daily FT.

Noting that the bank does not have a large market share in the international arena, he said NSB planned to widen its scope and services in remittances and other international banking services.

The bank also intends to open 10 new branches during this year, expanding its existing network, while relocating six branch buildings to provide a better and more convenient service to its customers.

“We have invested around Rs. 30 million to Rs. 40 million in expanding our branch network currently,” he added.

Perera emphasised that NSB was strictly adhering to the guidelines issued by the Central Bank with regard to the 15% special interest scheme imposed for senior citizens.

Commenting on the interest rates, he said that it would remain the same for the next six months. “With the reduced lending rates there was a significant demand for personal, housing loan facilities. We are planning to introduce a few more lending products in corporate syndicated loans, housing loans and personal loans in the near future,” he added.

The main event of the 43rd anniversary of NSB was held yesterday (16) at the NSB head office under the patronage of NSB Chairman Aswin De Silva, Director Suranga Naullage, Chief Executive Officer/General Manager Dhammika Perera, corporate management and other members of NSB’s staff.

Perera attributed the success of the bank to its prompt response, innovative measures, trust, mutual respect and integrity which it extends to all its different classes of depositors, particularly those in the rural sector.

“Millions of people in this country who have chosen NSB as their savings and banking partner confirm that we have acted in line with our vision and the interests of our valued customers and all other stakeholders,” he opined.

Speaking at the main event, NSB Chairman Aswin de Silva said: “As envisioned by our founders, our bank was mandated to inculcate the virtue of saving among the people, especially among the rural sector. As we celebrate our achievements of the past 43 years, I am indeed honoured to be appointed the Chairman of this great institution which has created a solid savings base for the country and partnered our people in the country’s development agenda.

“As our nation has emerged in a new era of national development, we will play a larger role in supporting the national vision. We will remain committed to empowering the nation to achieve financial excellence and economic strength as Sri Lanka moves towards financial security, rural development and regional influence. I, together with the National Savings Bank team members, would like to express our sincere gratitude to our citizens for the confidence placed in us.” the Chairman added.

From modest beginnings as a Post Office Savings Bank, NSB has risen to the status of Sri Lanka’s largest specialised bank and the third largest of all banks in terms of deposits.

With an asset base exceeding Rs. 700 billion and a customer base surpassing 10 million, the bank reaches citizens in all corners of the nation through its 5,000 customer access points. In addition, NSB is the first and only local bank to receive a AAA (lk) credit rating from Fitch Ratings Lanka and maintain the same rating for 12 consecutive years.
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Tokyo Cement completes amalgamation with Fuji Cement

Tokyo Cement Lanka, one of the premiere cement manufacturers in Sri Lanka, has completed its amalgamation process with Fuji Cement Lanka, the company said in a stock exchange filing.

The Registrar General of Companies has issued the certificate of amalgamation on 13 March 2015.

Accordingly, all shares of Fuji Cement Lanka represented in the stated capital of the company have been cancelled and Tokyo Cement Lanka will succeed to all the assets and liabilities of Fuji Cement Lanka.

The company said the amalgamation would enable both companies to realise benefits of greater synergies between these businesses.

The registered office of the amalgamated company Tokyo Cement Company (Lanka) Plc will remain the same and be at 469-1/1, Galle road Colombo 3.
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Ceylinco Insurance posts after tax profit of Rs. 2.1 b

Premium income exceeds Rs. 24.1 b; consolidated profit stands at Rs. 2.9 b

Marking another successful year, Ceylinco Insurance recorded a notable after tax profit of Rs. 2.1 billion, for the year ended 31 December 2014.

Contributing to this remarkable performance, the General and Life Divisions of Ceylinco Insurance, recorded profits after tax of Rs. 780 million and Rs. 1,363 million, respectively. Moreover, the consolidated results recorded an imposing expansion, with the profit before tax reaching anexceptional Rs. 4 billion, and the after tax profit standing at Rs. 2.9 billion.

Building upon past successes and reiterating its position as the clear market leader for the 11th consecutive year, Ceylinco Insurance, in 2014, forged ahead of the competition. Thus, the company managed to turn in an imposing premium income of Rs. 24.2 billion in 2014, with the General Division recording Rs. 12.2 billion, marking an increase of nearly Rs. 600 million year-on-year, and Ceylinco Life registering a premium income of Rs. 12 billion.

Meanwhile, the Motor Insurance premium income alone stood at a staggering Rs. 7.4 billion, with Non Motor Insurance contributing an impressive Rs. 4.8 billion, providing the total premium income of the General Division, which recorded a growth rate well above the annual industry average.

Adding further impetus to an already impressive financial performance, the total investments of the company exceeded Rs. 66.3 billion, growing by 12.5% over the past year, while assets had grown by 10%, to reach a staggering Rs. 90.5 billion by the end of 2014.

Ceylinco Insurance – General Managing Director/Chief Executive Officer Ajith Gunawardena, opining on the impressive performance of the company, said: “The insurance arena is dynamic and keen competition is the order of the day; in such a scenario, Ceylinco Insurance has maintained the leading edge and, therefore, what we have achieved in 2014, is even more significant, as it was quite a volatile year for the company, with the presidential election campaign gathering momentum towards the latter part of the year. Despite the challenges, we have striven to reach our expectations.

“Once again, we have come out on top, holding true to our beliefs, and, as always, we remain committed to managing our business, exercising disciplined control and visionary leadership. As always, the primary focus remains on our driving force – the customer, and accordingly, throughout 2014, Rs. 5.7 billion has been paid out in claim settlement by Ceylinco Insurance – General. The beneficiaries of these settlements, amount to a mammoth 139,652 customers, with an average 380 claims settled every day.”

Commenting on the Life Division’s performance during 2014, its Managing Director/Chief Executive Officer R. Renganathan said: “The year 2014 marks a decade of unbroken market leadership for Ceylinco Life in the long term insurance segment. This is an incredible achievement, given the context of ever-increasing competition and the short-sighted tactics employed by certain smaller players in the market, in a bid to achieve short term growth. The prime focus of Ceylinco Life has always been on the principal basis for Life Insurance – to provide assurance of the best possible protection to policyholders and their loved ones.”

Ceylinco Insurance, as the largest player in the insurance industry in Sri Lanka, is committed to ensuring growth and better meeting emerging opportunities: thus, the company now maintains the largest branch network in the island, which counts over 400 branches and sales outlets, providing General Insurance solutions.

During the year under review, the General Division of Ceylinco Insurance opened 66 new ‘VIP Counters’, adding convenience and providing greater accessibility to many potential customers throughout Sri Lanka

For over two-and-a-half decades, Ceylinco Insurance has been at the forefront of new innovations and dynamic solutions, setting the benchmark ever higher for the competition to follow, and benefitting the Sri Lankan populace immensely.

Having revolutionised the insurance industry locally and globally with the first ever On The Spot claim settlement, Ceylinco Insurance has always striven to deliver services that exceed customer expectations. A world first, the VIP On the Spot claim settlement process ensured that customers had an unparalleled advantage – the service went on to set a new standard in the insurance industry with competition vainly trying to emulate the Ceylinco Insurance model.

Ceylinco Insurance also enjoys the honour of being voted for by the people, as ‘The People’s Insurance Company’, consecutively, for the past eight years. Ceylinco Insurance was also, once again honoured to be the highest ranked insurance company by the LMD magazine, and the only Insurance Company, among the Top 25 Companies in Sri Lanka for 2014, as announced by Business Today.

Ceylinco Insurance, the undisputed market leader in Sri Lanka for eleven consecutive years, remains poised, as ever before, for all the challenges and the exponential growth 2015 will bring.

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