Sampath Bank in mega quest to raise Rs. 20 b via Rights, Debt

* Fresh capital-boosting move comes hot on the heels of oversubscribed Rs. 6 b debenture issue

Sampath Bank yesterday announced an unprecedented move to raise a mammoth Rs. 20 billion to boost its capital via equity and debt issues, hot on the heels of raking in Rs. 6 billion via debentures last week.

The third largest private bank and one of the industry’s best performing so far this year, Sampath Bank announced a three for 13 Rights Issue at Rs. 250 each. The move will involve the issuance of 50.13 million shares and raise Rs. 12.5 billion. Additionally, the bank also announced an issue of 50 million five-year Listed, Rated, Unsecured, Subordinated, Redeemable, Basel III Compliant Convertible Debentures with an option to issue up to a further 25 million convertible debentures in the event of an oversubscription at a consideration of Rs. 100 each.

The combined issues will raise a maximum of Rs. 20 billion aimed at boosting the capital of the bank to comply with the stringer Basel III requirements.

The announcement of a fresh round of fundraising comes soon after it raised Rs. 6 billion last week via a Basel III compliant, Tier II, rated, unsecured, subordinated, redeemable, five-year debenture issue, which was oversubscribed on Friday.

Funds raised via the debenture were to be used to support its loan book expansion and to strengthen its Tier II capital base.

Pending yesterday’s announcements, the trading of Sampath Bank shares was suspended but thereafter the stock closed at Rs. 315, down by Rs. 16.20 or 5%.

The net asset value per share as of 30 September 2017 was Rs. 287 at the Bank level and Rs. 317 at the Group level, up from Rs. 239 and Rs. 267 from 31 December 2016.

Continuing its robust growth momentum, Sampath Bank achieved Rs. 8.5 billion in Profit After Tax (PAT) within the first three quarters of 2017, up by 26.2% from a year earlier. Profit Before Tax (PBT) too grew by 32% YoY to reach Rs. 11.8 billion for the nine months ended 30 September 2017.

The Group, which comprises the bank and four fully-owned subsidiary companies, also posted a growth in PAT and PBT of 26.5% and 32.4% respectively for the nine months ended 30 September 2017.

Sampath Bank’s total asset base grew by 14.3% (annualised 19%) during the period under review to reach Rs. 752.8 billion as at 30 September 2017.

In comparison, the total asset position as at 31 December 2016 stood at Rs. 658.5 billion. Gross loans and receivables grew by 17.2% (annualised 23%) to hit Rs. 549.2 billion as at 30 September 2017, growing by Rs. 80.7 billion for the nine-month period. The total deposit base too increased by Rs. 95.4 billion for the same period, to reach Rs. 611.6 billion as at the reporting date, a growth of 18.5% (annualised 25%).

However, at 34.1%, the CASA ratio as at 30 September showed a decline compared to the 38.4% registered on 31 December 2016. The decline can be attributed to the higher growth recorded in the fixed deposit base.

Post third quarter results, the bank said its Common Equity Tier I Capital, Tier I Capital and Total Capital Adequacy ratios as at 30 September 2017,which stood at 8.46%, 8.46% and 11.85% respectively, have been computed based on Basel III requirements for the first time. All three ratios stood well above the minimum regulatory requirement of 6.25%, 7.75% and 11.75% respectively.

Vallibel One Plc, controlled by business leader Dhammika Perera, owns 15% stake in Sampath Bank followed by Ishara Silva (10%), the Employees Provident Fund (10%) and Rosewood Ltd. (5%).

www.ft.lk

Sri Lankan stocks fall for 4th straight session

Reuters: Sri Lankan shares fell for a fourth straight session on Wednesday, as investors offloaded stocks of beverages and oil palm companies, while a block deal pushed up turnover.

The Colombo Stock Index ended 0.06 percent weaker at 6,321.36, its lowest close since April 11. The index was down 0.4 percent last week, its sixth consecutive weekly decline.

“Today is also a very dull day. But a block deal pushed the turnover,” said Atchuthan Srirangan, senior research analyst at First Capital Holdings PLC.

“The dull sentiment will continue with the holidays ahead.”

Sampath Bank Plc, which announced a rights issue to increase its tier 1 capital to comply with Basel III requirements, dropped 1.4 percent. Nestle Lanka Plc fell 2 percent.

Turnover stood at 897.3 million rupees ($5.86 million), less than this year’s daily average of 933.3 million rupees.

Foreign investors net sold 79.6 million rupees worth of shares on Wednesday, but they have net bought 18.3 billion rupees worth of equities so far this year. 

($1 = 153.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

Sri Lanka buys aviation fuel from LIOC to meet rising demand

ECONOMYNEXT – Sri Lanka’s state-owned refiner Ceylon petroleum Corporation has bought 14,000 metric tonnes of aviation fuel from the local unit of Indian Oil Corporation to maintain stocks owing to a hike in demand.

The Ministry of Petroleum Resource Development said in a statement the fuel, bought from Lanka IOC, was being unloaded and had met the required quality standards.

The tanker which brought the stock of fuel had berthed on December 10.

The first sample drawn to test the fuel did not meet the required quality levels, apparently because of rust, the statement said.

But a second sample drawn on December 17 met the standard as the rust had settled in the hold, it said.

Nathan Sivagananathan on Sri Lanka’s Dunamis Capital Board

ECONOMYNEXT – Sri Lanka’s Dunamis Capital, which has interests in financial services and real estate, has announced the appointment of Nathan Sivagananathan as a director of its board with effect from 18th December 2017.

Sivagananathanis is an entrepreneur and Chief Growth Officer and a member of the board of a leading apparel company, a statement said.

He holds a BSc. in Engineering Management from the University of Hertfordshire, UK and has completed the Advanced Management Program at Harvard University, USA.

Sivagananathan an active angel investor in the island, trying to uplift startups and take them global.

Sri Lanka 03-month Treasury Bill yield falls to 7.69-pct

ECONOMYNEXT – Sri Lankan Treasury Bills yields fell across maturities at an auction Wednesday with the 03-month bill yield falling 28 basis points to 7.69 percent from the previous auction.

The central bank’s public debt department said the 06-month bill yield fell 08 basis points to 8.40 percent at the auction from 8.48 percent last week.

The 01-year bill yield fell 12 basis points to 8.92 percent from 9.04 percent last week, it said.

The public debt department got bids worth Rs36.4 billion and accepted bids worth Rs14.5 billion.

Sri Lankan stocks hit over 8-mth closing low; lenders fall

Reuters: Sri Lankan shares fell for a third straight session on Tuesday to their lowest close in more than eight months as investors offloaded banking and diversified stocks.

The Colombo Stock Index ended 0.33 percent weaker at 6,325.46, its lowest close since April 11. The index was down 0.4 percent last week, its sixth consecutive weekly decline.

“Today we are seeing some selling in Sampath Bank after it announced a second rights issue for the year on top of the debenture issue,” said Atchuthan Srirangan, senior research analyst at First Capital Holdings PLC.

“With holidays ahead, we think this dull period will continue.”

Samapath Bank Plc, in a filing to the Colombo stock exchange, said it will issue 50.1 million new shares. The bank will issue three shares for every thirteen existing shares held, to increase its tier 1 capital to comply with Basel III requirements.

The bank added it would also issue 50 million five-year debentures at an issue price of 100 rupees apiece.

Sampath Bank Plc fell 4.9 percent while conglomerate John Keells Holdings Plc ended 0.7 percent lower and biggest listed lender Commercial Bank of Ceylon Plc lost 1.2 percent.

Turnover was 357.6 million rupees ($2.34 million), well below this year’s daily average of 933.4 million rupees.

Foreign investors were net buyers of 26.7 million rupees worth of shares on Tuesday, extending their year-to-date net equity purchases to 18.4 billion rupees.

Plantation stocks came under pressure after the Russian agricultural safety watchdog said on Thursday that the country will place temporary restrictions on imports of all agricultural products from Sri Lanka, including tea, from Dec. 18.

Analysts said the Russian restrictions on tea could pose a threat to long-term tea prices and it could impact the earnings of plantation companies. 

($1 = 153.0500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Vyas Mohan)

Listed firms earnings dip 2% to Rs. 60 b in Sept.

Earnings of listed companies in the September quarter have declined marginally by 2% to Rs. 60.1 billion largely owing to a weaker performance by diversified financials and energy sector firms.

Analysing interim financials reported by 275 companies, First Capital Research revealed that September quarter earnings marginally dipped 2% YoY to Rs. 60.1 billion (Sep 2016 - Rs. 61.6 billion) driven by the adverse performance of the Energy (-108%YoY), Diversified Financials (-18%YoY) and Consumer Services (-54%YoY) sectors.

“The dip in earnings diminished the effect of positive earnings growth in the Food, Beverage and Tobacco (+9%YoY) and Banks (+6%YoY) sectors and one-off gains in the Food, Staples and Retailing (+178%YoY) sector,” First Capital said. It said the primary source of decline in September earnings was the Energy Sector (-108%YoY) which saw a loss of Rs. 137 million (September 2016 = Rs. 1,731 million), driven by LIOC (-112%YoY) and LGL (-85%YoY) attributable to higher oils prices and LP Gas prices that drove costs while the selling price remained fixed.

The Diversified Financials sector (-18%YoY) also almost equally contributed to an earnings dip where profits declined to Rs. 8.3 billion (September 2016 = Rs. 10.1 billion) driven by LOLC (-23%YoY).

Most finance companies in the sector saw higher net impairment losses as the effects of floods spilled over to the September quarter.

Consumer Services sector (-54%YoY) earnings dipped to Rs. 744 million (Sep 2016 = Rs. 1,613 million) driven by KHL (-71%YoY) which saw several hotels closing for refurbishment.

The negative effect was partially diluted by the positive earnings growth in the Food, Beverage and Tobacco sector (+9%YoY) to Rs. 12.5 billion (September 2016 - Rs. 11.5 billion) driven by BUKI (+788%YoY) and CARS (+2,419%YoY) which saw a dramatic increase in its gross margins while also being supported by plantation companies amidst higher tea prices.
The Banks sector (+6%YoY) reported earnings of Rs. 15.5 billion (Sep 2016 = Rs. 14.6 billion) driven by COMB (+11%YoY) which saw a healthy growth in net interest income.

However, First Capital Research said the largest positive effect on earnings came from the Food and Staples Retailing sector (+178%YoY) which recorded earnings of Rs. 2.7 billion (September 2016 = Rs. 960 million) driven by CARG (+189%YoY) which included a one-off non-operating gain of Rs. 1,012 million from the sale of its properties in Colombo 2. Having adjusted this one-off gain, the sector’s earnings dipped 33%YoY to Rs. 645 million while the quarter’s overall earnings dipped 6% to Rs. 58 billion.www.ft.lk