Sri Lankan stocks end near 2-week closing low

Reuters: Sri Lankan shares fell slightly on Monday and finished the session near a two-week closing low hit last week, as investors sold stocks of diversified and palm oil companies amid continued political uncertainty, stock brokers said.

The Colombo stock index ended 0.06 percent weaker at 6,552.81, following a 0.28 percent drop last week. On Wednesday, it posted its lowest close since Feb. 14.

Turnover was 1.3 billion rupees ($8.39 million) on Monday, more than this year’s daily average of 967.9 million rupees.

“It was a very slow day,” said Dimantha Mathew, head of research, First Capital Holdings, referring to inactive local investors.

Local investors continued to be on the sidelines as they were still worried about political uncertainty, he added.

Foreign investors bought a net 45.9 million rupees worth of shares, extending the year-to-date net foreign inflow to 5.97 billion rupees worth of equities so far this year.

Shares of Melstacorp Ltd fell 5.3 percent, Carson Cumberbatch Plc declined 6.1 percent and Bukit Darah Plc dropped 7.6 percent.

Sri Lankan shares hit a more than three-month high last month after two key parties in the ruling coalition decided to remain in the ruling coalition, allaying fears of a government collapse.

President Maithripala Sirisena reshuffled his cabinet last week, appointing his prime minister as the law and order minister, after the governing coalition suffered a series of defeats in local elections earlier this month.

However, the changes failed to boost the market as the cabinet reshuffle was not enough to address the election defeats, analysts said. 

($1 = 154.9000 Sri Lankan rupees) 

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

Union Bank posts Rs 782 mn operational profits

Despite the volatile macro environment Union Bank has performed exceptionally well in 2017 resulting in a 35.6% increase in profits from operating activities to Rs. 782 million.

This is in comparison to Rs. 577 million recorded in 2016, while recording a profit before tax (PBT) of Rs. 534 million, a 23% growth YoY.

Gross income of the Bank improved by 39.7% to Rs. 11,938 million in comparison to Rs. 8,546 million recorded in 2016. Income growth of the Bank in 2017 was mainly driven by the core banking operations. This highlights the Bank’s continuing progress in its swift transition to a full-fledged commercial bank with a wider focus on Retail, Corporate and SME sectors. The impressive results reflect the success of the rapid expansion initiatives implemented by the Bank following the capital infusion made in the latter part of 2014.

The net interest income of the Bank recorded Rs. 3,046 million during the year, significantly improving by Rs. 539 million which translates to an increase of 21.5%. The rise in net interest income was mainly driven by the balance sheet growth of the Bank.

The Bank’s loans and receivables stood at Rs. 70,578 million as at end of 2017. This was a growth of Rs. 15,140 million which translated to a healthy increase of 27.3%. Composition of the loans and receivables of the Bank changed in line with the Bank’s strategy for the year.

The Bank’s deposit mobilisation strategies yielded good results with the deposit base of the Bank standing at Rs. 70,326 million along with a growth of Rs. 18,484 million which is an impressive 35.7% increase in 2017. Much of this growth was steered by retail fixed deposit growth of Rs. 13,284 million, 58.7% growth over the previous year.

The Bank has made significant efforts to improve its fee and commission income using the key enablers established during the current and the previous years.

The Bank reported a net trading and other income of Rs. 656 million.

Operating expenses of the Bank was well managed and increased to Rs. 3,345 million during the year, as opposed to Rs. 3,008 million in 2016, which is only an increase of 11.2%. This is in comparison to the total operating income increase of 17.1% during the same period.

Commenting on the performance of the Bank, Director, Chief Executive Officer of Union Bank, Indrajit Wickramasinghe said, “the year 2017 ended a period of transformation and the implementation of a 3 year strategic plan that resulted in significant enhancements to the business model resulting in transformational growth in the Bank’s performance during these three years.”
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Nations Trust Bank records 31% growth in pre-tax profits

Nations Trust Bank closed the financial year December 31, 2017 with a post-tax profit of Rs.3,371 million, up by 18% over the previous year with pre-tax profits increasing by 31%.

A higher effective tax rate stemming from the increase in the financial services VAT rate as well as the additional tax of Rs. 210Mn on inter-company dividend payments impacted the Group bottom line growth. Healthy portfolio growth and strong fee-based income growth enabled the Group to record higher pre-tax profits, despite the effects of narrower NIMs and an increase in impairment provisions.

The Group’s Net Interest Income grew by 26% underpinned by good growth in its advances portfolio.The faster increase in deposits rates which mirrored market trends due to tightening of market liquidity, especially in the first half of the year, resulted in interest expenses increasing by 56% whilst the corresponding increase in interest income was lower at 42%. However, this trend was somewhat reversed in the second half with the decline in cost of funds and a moderate pick-up in NIMs.

Net fee and commission income increased by 29% driven by growth in the cards fee based income, increased trade and transactional fees as well as contributions made from structured financing transactions. Net trading losses for the year amounted to Rs. 558 Mn which is partly reflective of the swap cost arising from an increase in the funding of theforexswap book by30% and increase in SWAP premiums by 117bps.

Impairment charge increased by 58%, stemming primarily from the increase in individual impairment as the weather relatedweakening of thecountry’s agriculture sector had trickle down effects on several industry sectors. Previous year individual impairment charge was low as a result of reversals in impairment provisions.

Total operating expenses increased by 15% due to business growth in transactional volumes and increased operational activity. “It has been an extremely rewarding year as the Bank not only exceeded in achieving the financial goals set for the year but also successfully executed a numbers of strategic initiatives in our customer experience and digital journey,” Director/CEO Renuka Fernando, said.

Loans and advances recorded a well balanced growth of 25%.Depositsgrew by 28% faster than the industry growth of 17%. The Bank successfully concluded a $50Mn funding line from IFC adding more diversity to the medium term funding structure of the bank. During the year, the Bank reached a major mile stone in its digitization journey with thelaunch of Sri Lanka’s first digital bank, FriMi, a combination of next generation bank account, payment system and e-wallet wrappedup in one convenient app.
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Sri Lanka Telecom profits rebound in Dec qtr

ECONOMYNEXT - Profits at Sri Lanka Telecom, a wireline operators with mobile and pay TV, rose 470 percent to 707 million rupees in the December 2017 quarter from a year earlier, helped by margin gains and an absence of forex losses.

SLT group reported earnings of 39 cents per share for the quarter. In the year to December the group reported earnings of 2.18 rupees per share on total profits of 4.3 billion rupees, which were down 17.7 percent.

In the December quarter group revenues rose 6.7 percent to 19.35 billion rupees, with costs rising at a slower 2.2 percent to 14.2 billion rupees, helping boost gross profits before depreciation to 5.0 billion rupees, up 21 percent from a year earlier.

Depreciation rose from 3.7 billion rupees to 4.2 billion rupees and operating profits rose to 508 million rupees from 248 million. Other income was 588 million rupees, up from 428 million rupees.

Last year's profits were dragged down by a 455 million rupee forex loss as the rupee fell, but this year there was a 23 million rupee gain.

In the year to December, the group has made 22 billion rupees of investments in plant and property. The group has also spent 4.9 billion rupees on unspecified intangible assets up from 1.3 billion rupees a year earlier.

Sri Lanka's Bank of Ceylon net down 5-pct

ECONOMYNEXT - Profits at Sri Lanka's state-run Bank of Ceylon, fell 5 percent to 7,502 billion rupees in the December 2017 quarter from a year earlier, amid shrinking margins though the lender also posted 5.2 billion rupees in capital gains.

The bank reported earnings of 630.28 rupees per share for the quarter. In the year to December it reported earnings of 1,900 rupees on total profits of 21.8 billion rupees which were down 7.2 percent.

Bank of Ceylon is not publicly traded but its bonds are listed on the Colombo Stock Exchange.

Interest income in the quarter rose 24.8 percent to 46.75 billion rupees, but interest expenses rose at a faster 49 percent to 31.6 billion rupees, shrinking net interest income 7.6 percent to 15.1 billion rupees.

During the year to December, Bank of Ceylon grew loans 16.5 percent to 1.19 billion rupees, while deposits grew at a faster 23 percent to 1.56 billion rupees.

The bank reversed 904 million rupees in loan loss provisions. In the December 2016 quarter it made 3.7 billion rupees in specific provisions and a 5.3 billion rupee general provision.

Bank of Ceylon's bond portfolio grew in the held-to-maturity book rose 27.2 percent to 309 billion rupees and the trading portfolio grew 39 percent to 22.6 billion rupees.

There were 5.8 billion rupees in revaluation gains.

Fee and commission income rose 5.8 percent to 2.0 billion rupees. Other operating income fell 72 percent to 1.36 billion rupees.

Total group assets grew 16.5 percent just short of two trillion rupees to 1,999.12 billion rupees.

At standalone bank levels, total assets grew 16.9 percent to 1.951 billion rupees. Net assets grew 20.5 percent to 111.8 billion rupees.

Sri Lanka's Bairaha Farms to invest Rs1.3bn to increase production

ECONOMYNEXT – Sri Lankan poultry firm Bairaha Farms said it will spend Rs1.3 billion to increase day old broiler chick production by more than 50% over a period of three years.

The investment will be done through Siyane Farms Ltd., a fully owned subsidiary of Bairaha Farms, a stock exchange filing said.

Last January Bairaha Farms announced it was expanding feed mill storage facilities.

The company’s net profits had slumped by half in the December 2017 quarter to Rs98 million from a year ago with falling revenues and shrinking margins.

Sri Lanka’s Colombo Dockyard near profit in December quarter

ECONOMYNEXT – Sri Lanka’s Colombo Dockyard narrowed its losses further to just Rs192,000 in the December 2017 quarter from a loss of Rs76 million a year ago, and down from a loss of Rs189 million in the September 2017 quarter.

Interim results filed with the stock exchange showed earnings per share of 35 cents in the year to 31 December 2017, compared with a loss per share of Rs3.99 the previous year.

The stock last traded at Rs85.20 Friday. The firm has announced a final dividend of Rs1.50 per share for the financial year ended December 31, 2017.

December 2017 quarter sales of the yard, majority owned by Japan’s Onomichi Dockyard Company, rose 13% to Rs2.6 billion from a year ago with gross profit up 8% to Rs464 million.

Income tax expenses were sharply higher in the December quarter, the accounts showed.

Earnings from ship building and heavy engineering business fell during the 2017 financial year while that from ship repair business improved, the accounts showed.