BoC assets cross Rs 1.2T mark, profits dip

Ceylon FT: The country's largest bank, State banking giant Bank of Ceylon (BOC) reported a net profit of Rs 12.3 billion for the year ended 31 December 2013, down 16% from a year ago, with assets crossing the Rs 1.2 trillion mark, financial results filed with stock exchange showed.

Interest income rose 21.02% to Rs 119.5 billion and interest expenses grew 30.4% to
Rs 80.2 billion, leading to a net interest income of Rs 39.34 billion, up 5.6% from a year ago.

Net fee and commission income grew 12.7% to Rs 5.9 billion. Impairment charges surged 190.26% to Rs 7.99 billion and operating expenses grew 14.53% to Rs 27.24 billion. Interest margin declined to 3.41%, down from 3.83% a year ago.

The bank's assets grew 13.5% from a year ago to Rs 1.22 trillion, up from Rs 1.08 trillion a year earlier.

Loans and advances grew 5.17% to Rs 746.6 billion and deposits grew 21.5% to Rs 850.7 billion.

Net asset value per share amounted to Rs 13,155, up from Rs 11,445 a year ago.

The gross non-performing loans ratio stood at 4.32% as at end 2013, up from 2.76% a year ago. The net non-performing loans ratio was 2.76%, up from 1.62% a year ago.
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AMW Capital Leasing shows strong growth

By J. Kurukulasuriya

Ceylon FT: AMW Capital Leasing and Finance PLC, whose shares are closely held and have not been traded on the CSE since 2011, showed an impressive profit after tax of Rs 189 million for the year ended 31 December 2013. Shares were last traded at a price of Rs 22.40.

The Central Bank of Sri Lanka, has requested all finance companies to take necessary steps to comply with the financial sector consolidation programme, but AMW capital leasing has not given any indication of a proposed merger, in its latest accounts. However, 90% of the shares are held by Associated Motorways Private Ltd., and 9.99% by Trading Enterprises Company LLC. The balance 0.01% were unspecified.

The company has a 'public shareholding' of 10%, as defined by the CSE regulations.  Directors do not hold any shares.

Total revenue for 2013 was Rs 1,130 million, up 23%. Segment wise, 'finance leases' were the main contributor to this income with 61%, and hire purchase 23%, with term loans contributing 12%.

The balance sheet indicated significant increase in loans and advances made, up 300% to Rs 1,034 million. 'Time deposit liabilities' increased from Rs 2 million to Rs 267million.

The stated capital of the company is Rs 200 million, with the number of shares representing the entity's stated capital as of 31 December 2013, being 20,000,000.
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Nimal Perera: PABC will recoup loss in profitability caused by gold

Ceylon FT: Pan Asia Bank PLC (PABC) Chairman Nimal Perera said falling gold prices proved a game changer in 2013, but was confident the bank would recoup the sharp loss in profitability this year.

"The deterioration in asset quality was mainly in the pawning portfolio, resulting from the sharp fall in the price of gold. The narrowing of interest rate margins as well as increased provisioning and write-offs contributed to the decline in profitability of the banking sector and for Pan Asia Bank as well.

The direct effect of this impacted on our pawning portfolio adversely proving to be a setback this financial year," he told shareholders in the bank's latest annual report.

"Pan Asia Bank, which held a portfolio of Rs 6.7 billion in Pawning at the beginning of the year, incurred a loss more than a billion as a result of this debacle in prices of gold. However, we are confident of recouping this loss in profitability in the months ahead. Further, the credit squeeze and high interest rates proved dampeners, but lending has eased since," Perera said.

Net profit fell 86.64% during the year to Rs 114.86 million although gross income gained 16.58% to Rs 9.05 billion.

Deposits grew 12.37% to Rs 53.8 billion and the bank's loan book grew 4.52% to Rs 47.12 billion.

Total assets grew 15.77% to Rs 64.9 billion.

Net assets value per share fell 4.37% to Rs 13.72 and earnings per share fell 86.67% to 39 cents.
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Some 13 firms to go public this year

By Duruthu Edirimuni Chandrasekera

Around 13 Sri Lankan private companies are preparing to go public this year, Colombo Stock Exchange (CSE) officials say.

“These are in many different sectors and they will list on the CSE in a few months,” a CSE official told the Business Times on the sidelines of an issuer relations forum held recently in Colombo to expose the IT-BPO and ‘Knowledge Service Industry’ to the benefits of listing on the CSE. It was hosted by CSE and the Securities and Exchange Commission (SEC) in association with the Sri Lanka Association of Software and Service Companies (SLASSCOM).

The forum saw over 100 CEOs and Chief Financial Officers of unlisted potential issuer companies within the industry participate. Rajeeva Bandaranaike, CEO, CSE said that the CSE is willing to consider a ‘separate set of criteria’ for listing IT-BPO firms on the CSE. 

“We are discussing a separate trading board for SMEs and similarly we’d also like IT-BPO firms to go public and in this respect we can discuss for them,” he said, adding that criteria for SMEs to list and a separate board for these units, is still at a preliminary stage. The CSE and the SEC are already working with the Board of Investment (BoI) for a separate board called the BoI Board to facilitate BoI firms to go public.

Mr. Bandaranaike said that a successful listing where the issuer receives a fair price for the shares and at which the investor generates solid returns, coupled with a good relationship between the two parties, often translates into the company being able to raise fresh capital for the next phase of growth at later dates at a higher valuation multiple (through rights issues, further listings and listed debt, etc).

High visibility, transparency, and enhanced liquidity enable a listed company to attract high-quality shareholders, such as institutional and strategic investors, on to its shareholder register, he said, adding that building relationships with such potential strategic partners helps the company to take on investments beyond the capacity of internally generated free cash flow, enabling growth at an unprecedented pace and perhaps in directions not previously envisaged.

A common misconception that listing on the stock exchange was merely a tool for raising capital was dispelled by him. “Listing on the stock exchange brings with it a number of benefits, in addition to the raising of capital. A company is able to enhance its corporate profile through visibility, attribute an objective value to the company, obtain tax incentives and create an optimal capital structure. There is also a people centric focus in going public, since it enables a company to align the interests of shareholders, management and employees, while attracting strategic investors,” he said.

Finally a listing is an ideal means of sustaining business continuity, since it acts as alternative currency for acquisitions and mergers, increases liquidity and provides you with the option of returning to the market to fund the next phase of growth for your company Mr. Bandaranaike said, in his presentation, “Benefits of Listing”.

“As the IT/BPM industry is going through a fast phased growth, we are delighted to partner with CSE to bring a whole new sector to the local stock exchange. Most mature markets have a very vibrant technology sector and we are glad to be able to take the first steps in creating the path for the same in Sri Lanka,” Chairman SLASSCOM Madu Ratnayake said.

“The country seeks to project itself as a knowledge hub and therefore the development of the IT services industry is vital. By listing on the stock wxchange IT companies are able to better strengthen their internal structures and become more attractive to potential strategic investors who would value transparency and governance,” Deputy Director General and Officer-in-Charge-SEC Dhammika Perera said.
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