Sri Lanka’s Sanasa Bank Sept net profit up 16-pct

ECONOMYNEXT – Sri Lanka’s Sanasa Development Bank said September 2015 quarter net profit rose 16 percent to 160 million rupees from a year ago with bad loans falling and interest margins improving.

Net interest income rose 23 percent to 841 million rupees with interest income up 41 percent to 1.7 billion rupees and interest expenses up 52 percent to 876 million rupees, a stock exchange filing said.

Net fee and commission income fell six percent to 61 million rupees.

Earnings per share for the September 2015 quarter were 4.13 rupees, up from 4.14 rupees the year before.

In the nine months to 30 September, EPS rose to 14.41 rupees from 12.50 rupees the year before.

Loans and receivables increased 35 percent to 43 billion rupees as at 30 September 2015 while liabilities went up 30 percent to 39 billion rupees from the previous year.

Sanasa Development Bank’s interest margin improved to 7.28 percent as at 30 September 2015 from 6.97 percent the year before while the bad loans ratio fell to 2.95 percent from 3.76 percent.

Sri Lanka Textured Jersey Sept net up 66-pct

ECONOMYNEXT – Sri Lankan fabric maker Textured Jersey Lanka PLC said September 2015 quarter net profit rose 66 percent to 468 million rupees from a year ago as it reaped gains from new acquisitions and kept costs under control.

Sales rose 16 percent to four billion rupees. Earnings per share for the quarter rose to 71 cents from 43 cents the year before, a stock exchange filing said.

Net profit margin rose to 9.15 percent for the period ended 30 September 2015 from 7.27 percent a year ago.

Chairman Bill Lam said the company has completed a “very strong quarter”, which included its first month of successful consolidation of Indian fabric maker Ocean India (Private) Limited (OCI) and a full quarter in the case of Quenby Lanka Prints (Private) Limited (QPL), an Indian fabric printer.

For the quarter ending 30 September 2015, TJL as a standalone company recorded a net profit of 379 million rupees, up 34 percent, he said.

“The bottom-line growth is driven primarily from economies of scale, tight cost management and improved operating efficiencies, which is reflected in the gross profit growth of 41 percent,” Lam said.

“TJL’s standalone performance was reinforced with the consolidation of both QPL and OCI, resulting in the group’s consolidated results reporting an impressive revenue growth of 16 percent and bottom-line growth of 66 percent.

“The group gross margin growth of 84 percent is driven by the envisaged sourcing synergies and group level cost management strategies, coupled with the successful turnaround that the teams have helped execute in each of the acquired entities,” Lam said.

Sri Lankan shares down, led by Commercial Bank

Reuters: Sri Lankan shares ended lower on Thursday for the first time in seven straight sessions as foreign investors sold shares in Commercial Bank of Ceylon amid uncertainty as the U.S. Federal Reserve revived expectations it may raise interest rates by year-end.

Foreign investors were net sellers of 319.1 million rupees ($2.26 million) worth of shares on Thursday, extending the year-to-date net foreign outflow to 3.44 billion rupees.

The main stock index ended down 0.34 percent at 7,070.13, from its highest close since Oct. 12 hit in the previous session.

The day's turnover was 898.8 million rupees, less than this year's daily average of 1.1 billion rupees.

Shares in top lender Commercial Bank of Ceylon fell 1.38 percent, leading the fall in the overall index.

"Foreign selling in Commercial Bank brought down the market," a stockbroker said on condition of anonymity. "We see some volatility until the Fed raises the rates."

Stockbrokers also said the market is waiting for some clear direction from the government.

Prime Minister Ranil Wickremesinghe is expected to announce the country's economic policy on Nov. 5, government sources said, outlining the government's economic priorities ahead of the 2016 budget scheduled for Nov. 20.

($1 = 140.9000 Sri Lankan rupees) 

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Sunil Nair)

90-pct vehicle leasing facility to come into effect today

(LBO) – Sri Lanka’s Finance Ministry said that a 90 percent leasing facility for motor vehicles will come into effect from Thursday.

An official notice will be sent out to the government and private financial institutions today, the ministry said.

From September 15, 2015, the 100 percent loan to value was limited to 70 percent by the Central Bank of Sri Lanka.

However, considering the negative impact this might have on the market the Finance Minister stated that a 90 percent leasing facility will be given for motor vehicles.

Sri Lanka's Lighthouse Hotel profits down on forex loss

ECONOMYNEXT - Profits at Sri Lanka's Lighthouse Hotel fell 21 percent to 6.2 million rupees in the September 2015 quarter from a year hit by a forex loss, while revenues remained flat.

The firm reported earnings of 14 cents per share for the quarter. In the six month to September profits were down 72 percent to 6.6 million rupees.

An upmarket hotel in Sri Lanka's South West coast near Galle, Lighthouse said revenue fell 1 percent to 169 million rupees while expenses was flat.

The was hit by a 7.8 million loss on a forex loan after Sri Lanka's rupee fell as the Central Bank printed money to finance a budget deficit.

Though a 'loss' is charged to account, assuming the same volume of sales priced in dollars, a fall in the currency increases nominal revenues, giving more rupees to service a forex loan.

Currency deprecation does not actually increase the real liability of dollar loans, but it decreases the real liability of loans and costs priced in domestic currency and real salaries of workers.

Many Sri Lankan hotels and also exporters have borrowed dollars in recent years, and charging the forex loss is important to reduce calls for currency depreciation, whose perceived benefits of devaluationism is an aspect of what is called the 'money illusion' and comes primarily from a fall in real salaries of workers.

Sri Lanka’s Trillion, Pan Asia in asset backed securitisation for hybrid cars

ECONOMYNEXT – Trillion Investments Limited, a Sri Lankan investment manager, launched what it said was the island’s first “green” asset backed securitisation with Pan Asia Bank, providing funding for hybrid vehicles.

Pan Asia Banking Corporation, which is supporting efforts to reduce Sri Lanka’s carbon footprint, has fully subscribed to the 750 million rupee five year issue of asset-backed securities, bond-like instruments that pay investors income based on car leases.

“The real sector has these transactions but there’s a vacuum in the financial sector,” said Kenneth De Zilwa, Chairman of Trillion Investments Limited.

“With the growth phase that Sri Lanka is in we believe that not only equity but debt plays a big part in asset creation and capital formation,” he told a news conference.

Neomal Goonewardena, Partner at Nithya Partners, which acted as Legal Counsel to the issue, said the asset backed securitisation provides funding for ‘green assets’, namely hybrid vehicles.

“Pan Asia Bank is financing the creation of green assets – in this case a pool of hybrid vehicles, which are environmentally-friendly assets,” he said.

Tyrone Hannan, Head – Global Transaction Banking, Deutsche Bank, said the bank is the Trustee and Administrator to the issue.

“This first time issue opens up a new source of funding opportunities for investors.”

Browns Capital buys into Sri Lanka solar power plant

ECONOMYNEXT - Browns Capital PLC said it had invested 407 million rupees to acquire a 50 percent stake in Saga Solar Power (Pvt) Ltd.

The firm said in a stock exchange filing it bought 38.7 million shares of Saga Solar Power (Pvt) Ltd. which operates a 10MW solar power project at Baruthakanda village in southern Hambantota.

The Saga Solar power plant, set up under the Sri Lanka Sustainable Energy Authority, has a 20-year power purchase agreement.