Commercial Credit growth continues with Rs. 2.1 b profit

Commercial Credit and Finance PLC, posted an impressive 108.7% growth in net profits for the financial year ended March 31,2015 to reach Rs. 2.1 billion.

This set a new milestone for the company, moving up from the Rs. 1 billion achieved for the first time in 2013/14.

"The results delivered by Commercial Credit for the financial year 2014/15 are extraordinary and will go down in the annals of the history of our Company as the year during which we first recorded Rs. 2.1 billion in profits.

This is all the more creditable in view of the various challenges of differing magnitudes that the leasing and finance sectors experienced during this period," Commercial Credit's Chief Operating Officer Rajiv Casie Chitty said.

The company's total Customer Deposits grew by over 84.6 per cent in the 2014/15 financial year, with 93.7 per cent of the growth coming from the Fixed Deposits segment.

Total assets grew from Rs. 31.6 billion as at the beginning of the financial year under review to Rs. 57.7 billion by year-end.

The interest income reached Rs. 11.1 billion for the year under review, recording an increase of 61.2 per cent over the previous financial year.

The total lending portfolio grew by 80%. The main drivers of this growth were Lease and Hire Purchase, and also, Micro Finance Loans which grew by 101.2 and 104.1 per cent respectively.

"Our continued efforts to provide customer centric products and a value-based service ethos have been the corner stones of sustaining this growth momentum over consecutive years. We have been able to win the trust of the people.

The growth of our deposit base and loan portfolio is testament to this confidence," Casie Chitty added.

The Company also expanded its service network substantially to reach all districts of the country. In the financial year 2014/15 the Company extended it service network from 75 to 119 locations. In selecting the locations for expansion, the Company not only considered current and future business potential, but also the needs of the population in such areas.

"With this extended service network, Commercial Credit is well positioned to further develop its business activities.

The Company is undertaking substantial strategic investments to further strengthen the IT infrastructure of the Company.

This is a fundamental requirement in view of the growing service network, increasing transaction volumes and growing capabilities and capacities demanded by business needs."

Directors have recommended a final dividend of Rs. 1for the year ended March 31,2015. This is in addition to an interim dividend paid of 0.50 per share during the year.

The company acquired 96.9% of Trade Finance & Investments PLC (TFI), a registered finance company listed on the Colombo Stock Exchange, under the financial sector consolidation program initiated by the Central Bank of Sri Lanka.
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Orient Finance to suspend shares

Orient Finance has informed the Colombo Stock Exchange that in the event the Special Resolution approving the amalgamation of Orient Finance with Bartleet Finance is passed at the forthcoming Extraordinary General Meeting scheduled for today, the dealings in the ordinary shares of Orient Finance will be suspended from June 26,2015.
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SEC to get tough on manipulators

The Securities and Exchange Commission (SEC) will take rigorous action against those who commit regulatory breach,which include market manipulation,misconduct by regulated entities and corporate disclosure-related offences,Chairman Tilak Karunaratne said.

"However, the current Sri Lanka securities law, which was enacted 28 years ago, has its drawbacks with the enforcement framework built on criminal prosecution and compounding of offences," he said in the SEC annual report.

He said in the past the SEC has mainly resorted to issuing warning letters, imposing suspensions on investment advisors and compounding.

"In tandem with the expansion of the capital market it has been considered necessary to make changes to the SEC Act to broaden the range of enforcement powers", Karunaratne said.

The proposed amendments to the SEC Act will introduce a range of administrative and civil sanctions, including the seeking of restitution to any person aggrieved.

The SEC increased its efforts to expedite the amendments since this will pave the way for credible regulation and market confidence. In addition the amendments to the Act will align the SEC governance structure with International Organisation of Securities Commissions (IOSCO) standards, facilitate the introduction of new categories of market intermediaries and regulation of their business conduct and provide for the regulation of derivative products.

In line with our mandate the SEC continue to monitor, mitigate and manage risk with the aim of promoting integrity in the market. Through our Risk Based Supervisory Framework we attempt to focus on capital and other prudential requirements for market intermediaries, protect client assets and compliance with internal controls on a regular basis. Our supervisory role further extends to mitigating the settlement risk in the securities market.

Towards achieving this objective we are getting together with the Colombo Stock Exchange (CSE) to setup up a Clearing House which will act as a Central Counterparty (CCP) for settlement of securities, shares, corporate debt and any other instruments coming under our purview.
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Sri Lanka state banks profits up 11-pct from January to May 2015

June 24, 2015 (LBO) – Sri Lanka’s Finance Minister Ravi Karunanayake says there is a 11 percent increase in the overall profits of the three state banks over the first five months of this year.

“Overall profits at National Savings Bank, Bank of Ceylon and People’s Bank have been increased by 11 percent,” Karunanayake said.

“We need to increase that to 25 percent.”

Karunanayake was speaking at a ceremony held at temple trees to present appointment letters to over 1,000 employees joining National Savings Bank, Bank of Ceylon, People’s Bank and Sri Lanka Customs.

Sri Lankan shares steady as investors await elections

Sri Lankan shares ended steady on Wednesday, hovering near a one-week high, as losses in banking and telecommunication stocks offset gains in large-caps in moderate trade due to political uncertainty ahead of the announcement of parliamentary polls.

The main stock index ended 0.13 points weaker at 7,053.83, slipping from its highest close since June 18 hit on Tuesday.

Turnover stood at 606.35 million rupees ($4.5 million), well below this year's daily average of about 1.1 billion rupees.

"Not many people buying or no selling. Investors are just waiting till the elections are announced," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

Dialog Axiata Plc fell 1.82 percent, while Nestle Lanka Plc rose 3.32 percent and Ceylon Tobacco Co Plc ended up 1.07 percent.

The market saw net foreign outflows of 64 million rupees on Wednesday, extending net foreign outflows in the past 21 sessions to 3.5 billion rupees in stocks.

The bourse, however, has seen net inflows of 2.47 billion rupees into equities so far in 2015.

Investors were confused due to a lack of direction on interest rates, economic policies, and on the timing of the parliamentary election, analysts said.

President Maithripala Sirisena's government has said he would dissolve the parliament once some crucial reforms, including an electoral bill, are passed, but is yet to fix a date for the election. 

($1 = 133.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka’s hotel sector challenged due to increase of graded room supply: Hayleys

June 23, 2015 (LBO) – Sri Lanka’s Hayleys, a hotel operator says the hotel sector is challenged due to increase of graded room supply as several new domestic and international players expanding capacity.

“The increased supply of graded hotel rooms has led to severe price competition and margin erosion, particularly given the prevalent shift in spending patterns of tourists,” Hayleys told shareholder in its Annual report 2014/2015.

“Furthermore, the dearth of trained industry personnel to support the anticipated boom in tourism, may impact the growth prospects of the country’s hotel sector.” The company added.

With the entrance of several new domestic and international players to the sector together with existing players expanding capacity, total room capacity increased by 1855 to reach 18,078 graded rooms in 2014.

Meanwhile, there has been a gradual shift in the source markets for the country’s tourism sector, with arrivals from traditional markets of Western Europe declining as a percentage of total arrivals whilst East Asia and East Europe have increased its market share, led by China.

Supported by the surge in arrivals, occupancy rates at graded hotel establishments increased to 74.3 percent during the year (2013: 71.7%) with total tourist guest nights increasing by 37.9 percent in 2014.

Hayleys owning and operating 7 resort properties through the Amaya Resorts and Spas chains of hotels and 1 city hotel, The Kingsbury.

The Group said in going forward the company has focused on a strategy of consistently expanding its room capacity and upgrading its properties to differentiate its offering.

Over the years, all resorts within the cluster have been upgraded from 3-star category to 4, 5-star and boutique hotel categories.
Three Group hotels (Signature by Amaya, Langdale by Amaya and Hunas by Amaya) have been classified as Small Luxury Hotels by Small Luxury Hotels of the World.

Data showed, the Hotels and Resorts saw a revenue growth of 12 percent during the year, supported by good occupancy levels as tourist traffic into the country increased but the sector profitability growth was slower at 2 percent, affected by losses stemming from Amaya Beach, Pasikudah, which was added to the Group’s chain of hotels during the year.

Future Outlook

“The short to medium term outlook for the country’s tourism sector is encouraging, and the Group’s focus on expanding capacity and upgrading its properties over the last few years has allowed it to position itself as one of the country’s leading leisure sector operators,” the company told shareholders in its 2014/2015 annual report.

The company will add another green player to its hotel chain while adding an apartment complex for its city hotel.

“The next financial year will see the addition of an eco-lodge to our portfolio and also capacity expansion in the city hotel through combining an apartment complex as an option for long stay guests,” the company said.

“Over the longer term, we are well positioned to further expand room capacity given our land bank of close to 30 acres in coastal areas of the country.”

Sri Lanka mulls mandatory rating for stock broking firms

COLOMBO (EconomyNext) – Sri Lanka’s capital markets regulator has said it is considering a mandatory rating for stock broking firms to improve investor confidence.

Thilak Karunaratne, Chairman of the Securities and Exchange Commission of Sri Lanka (SEC), said that stock broking companies perform an important role in the capital market by facilitating trades for investors.

The stock broking industry has “progressed considerably” in the provision of services as well as in terms of the number of players in the market, he said in the SEC’s annual report.

“In order to enable especially retail investors to select a stock broker by ascertaining the credibility of the firm, the SEC is exploring the possibility of introducing a mandatory rating for stock broking firms,” Karunaratne said.

“It is envisaged that this rating will aim to preserve the integrity of the market and protect investor interest.”

Karunaratne said the SEC will have an industry consultation before implementing the proposed mandatory rating requirement.