Sri Lankan shares close at 2-month high

Sri Lankan shares rose for a third straight session on Friday and closed at their highest in two months, as expectations of strong corporate earnings and political stability after the parliamentary polls next month boosted investor sentiment.

The main stock index ended higher 0.78 percent, or 56.43 points, at 7,269.05, its highest since May 25.

Turnover was 1.61 billion rupees ($12.05 million), more than this year's daily average of 1.06 billion rupees.

Foreign investors, who have been net sellers of 401.4 million rupees worth of shares so far this year, were net buyers of 77 million rupees on Friday.

"Next week we could see some dip amid month-end settlements. But overall it's positive sentiment," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Analysts also expect local companies to report strong financial results for the April-June quarter.

Shares in Lion Brewery Ceylon Plc rose 1.81 percent, while conglomerate John Keells Holdings Plc rose 1.84 percent. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka Monetary Policy Review – July 2015 - Policy rates unchanged

Press Release By Economic Research Department -CBSL
Inflation, as measured by the year-on-year change in the Colombo Consumers’ Price Index (CCPI), remained at near-zero levels recording 0.1 per cent in June 2015 compared to 0.2 per cent in the previous month. Annual average inflation also continued to moderate further to 1.7 per cent in June 2015 from 1.9 per cent in the previous month. Meanwhile, indicating well contained underlying demand pressures, core inflation also remained low at 2.8 per cent in June 2015 on a year-on-year basis compared to 2.6 per cent in the previous month. It is expected that the current level of inflation will continue in the next few months mainly reflecting the benefit of downward adjustments in administered prices of fuel and energy. 

In the monetary sector, supported by the prevailing low interest rate environment, credit to the private sector by commercial banks grew by 17.6 per cent, year-on-year, in May 2015. In absolute terms, credit to the private sector expanded by Rs. 48.6 billion in the month of May and by Rs. 150 billion on a cumulative basis during the first five months of the year. Driven by the expansion in private sector credit along with increased bank borrowings by the public sector, broad money supply (M2b) increased by 15.4 per cent on a year-on-year basis in May 2015, compared to 13.9 per cent recorded in the previous month. 

With regard to the external sector, increased expenditure on imports relative to earnings from exports widened the trade deficit in May 2015. Gross official reserves, which stood at US dollars 6.8 billion at end May 2015, are estimated to have increased to US dollars 7.5 billion by end June 2015 largely representing the receipt of the proceeds from the International Sovereign Bond and Sri Lanka Development Bond issuances. At the same time, other regular inflows such as earnings from tourism and workers’ remittances also supported the external sector during this period. In addition to the US dollars 400 million made available to the Central Bank of Sri Lanka by the Reserve Bank of India (RBI) in April 2015, the Central Bank entered into another currency swap agreement with RBI on 17 July 2015 enabling the country to draw a further amount of US dollars 1.1 billion. The availability of this new facility strengthened the resilience of the external position of the country while supporting greater stability of the exchange rate. So far during the year, the Sri Lankan rupee has depreciated by 2.0 per cent to Rs. 133.70 against the US dollar. 

Meanwhile, the Department of Census and Statistics (DCS) has replaced the base year for national accounts statistics from 2002 to 2010, while upgrading the compilation methodology to comply with the United Nation’s System of National Accounts - 2008 (SNA 2008). According to the rebased national accounts statistics, real GDP growth for the first quarter of 2015 is estimated at 6.0 per cent with strong performance in the Services sector. 

Taking the above developments in the economy into consideration, the Monetary Board, at its meeting held on 23 July 2015, was of the view that the current monetary policy stance is appropriate. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 per cent and 7.50 per cent, respectively. 

Sri Lanka’s Keells Food Products Q1 profits up 86 pct: Interim Report

 (LBO) – Sri Lanka’s Keells Food Products Plc, part of the John Keells conglomerate said profits rose 86 percent to 70 million rupees in the June 2015 as revenues also grew.

The firm reported earnings of 2.76 rupees per share up from 1.48 rupees in 2014. The stock closed at 141.30 rupees on Thursday.

The firm is a manufacturer and distributor of processed meat, breaded meat and convenience food products which incorporated in 1982.

The firm said revenues grew 18 percent to 682 million rupees in the June quarter and cost of sales grew 15 percent to 486 million rupees allowing gross profits to grow at a faster 26 percent to 195 million rupees.

Selling and distribution expenses rose 21 percent to 66.7 million rupees.

Treasury to release Rs 544 m to pay GK depositors

The Treasury will release Rs.544.3 million needed for the first tranche towards the repayment of the defunct Golden Key Credit Card Company (GK) depositors.

This in response to a pledge made by the Finance Ministry that the government will mediate to settle this much anticipated and long over due issue.

The Cabinet on a proposal made by Finance Minister Ravi Karunanayake approved this payment and the money is now being dispersed.

Accordingly, the depositors who have had their account balance up to Rs two million will be paid within one month from today.

The balance will be repaid before the end of one year.
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CSE nets US$ 58.2 m upto May 2015

Foreign investments in the Colombo Stock Exchange (CSE) recorded a net inflow of US dollars 58.2 million during the first five months of 2015.

This includes net inflows to the secondary market amounting to US dollars 33.5 million and inflows to the primary market amounting to US dollars 24.7 million. Meanwhile, net cumulative inflows to the CSE by 21July 2015 amounted to US dollars 33.1million.

According to Government Data, foreign investments in the government securities market recorded a net outflow of US dollars 237.3 million during the first six months of 2015 compared to a net inflow of US dollars 196.5 million during the corresponding period of 2014. During the first five months of 2015, long term loans obtained by the Government amounted to US dollars 372.0 million compared to US dollars 848.1 million received in the corresponding period of 2014. Meanwhile during the year, up to 21July 2015, the rupee has depreciated by 2.1per cent against the US dollar. However, based on cross currency exchange rate movements, the Sri Lankan rupee appreciated against the euro by 10.0 per cent, the Australian dollar by 9.2 per cent and the Japanese yen by 2.0 per cent, while depreciating against the pound sterling by 2.0 per cent and the Indian rupee by 1.6per cent during this period.

In May 2015, workers' remittances declined marginally by 3.5 per cent, year- on-year, to US dollars 537.7 million from US dollars 557.5 million in May 2014.

Meanwhile, on a cumulative basis, inflows from workers' remittances increased marginally by 1.0 per cent to US dollars 2,803.1 million during the first five months of 2015 in comparison to the corresponding period of 2014. However, workers' remittances are expected to gather momentum during the second half of the year.
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Sri Lanka shares end at near 8-week high on stability hopes, earnings

Sri Lankan shares closed at their highest level in about eight weeks on Thursday on strong foreign inflows for a second session as hopes of political stability after Aug. 17 parliamentary polls and better earnings lifted sentiment, brokers said.

The main stock index ended 0.18 percent, or 12.99 points up at 7,212.62, its highest since May 29.

Turnover was at 2.21 billion rupees ($16.5 million), boosted by foreign buying. This was the highest turnover since July 3 and more than double of this year's daily average of 1.06 billion rupees.

Foreign investors were net buyers of 930.7 million rupees on Thursday, but they have been net sellers of 478.4 million rupees worth of shares so far this year.

"Investors are buying because they are confident of getting a stable government after the elections," Danushka Samarasinghe, research head at Softlogic Stockbrokers said.

Samarasinghe expects Sri Lankan companies to post strong results this quarter.

Analysts also said hopes over political stability after Aug. 17 parliament election also helped sentiment. They expect next month's election to help strengthen President Maithripala Sirisena's political position.

Conglomerate John Keells Holdings Plc rose 0.64 percent, while Hemas Holdings Plc rose 4.12 percent, pushing the overall index up.

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Union Bank posts Rs 60 m PAT in Q2

Union Bank has posted a net profit of Rs 60 million in the second quarter of 2015.

Union Bank Director and CEO Indrajit Wickramasinghe said the first half of 2015 was a crucial period with the Bank restructuring itself.

“I am pleased to see the results of the many strategic development initiatives and investments gathering a strong growth momentum and its results evident with the performance the bank as highlighted as at June 2015”,he said. Second quarter results have highlighted an impressive growth reflecting on the rapid development initiatives the Bank embarked. From page iv

“The growth trajectory that is envisioned will deliver continuous value propositions and benefits to our customers for greater banking convenience. We have ensured greater process efficiencies and aligned our teams to deliver the best value and service.”

The Bank recorded a significant increase in revenue for 1H15, in comparison to the corresponding period in 2014. Total operating income for 1H15 grew by 37% YoY to Rs 1,350 Mn. Net Interest Income of the Bank grew by 43%YoY, to Rs.1,039 Mn for 1H15. Fees and Other operating income grew by 21% in comparison to the corresponding reporting period.

The Group recorded a significant increase in revenue for 1H15 in comparison to the corresponding period. Total operating income for 1H15 grew by 28% YoY to Rs 1,617Mn. This is mainly due to the strong Net Interest Income growth of 51%.

The Bank reported a profit before tax and financial services VAT of Rs.135Mn for the period.

This is a 291% increase in comparison to the previous period. Furthermore the Bank reported a Net profit after tax of Rs.60Mn for the 6 months period.

This is despite the significant investments that have been made, which are in line with the new strategic initiatives.
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