Fitch affirms Siyapatha Finance at ‘A’; Outlook Stable

Fitch Ratings Lanka said yesterday it has affirmed Siyapatha Finance Ltd.’ (SLFL) National Long-Term Rating at ‘A(lka)’. The Outlook is Stable. The agency has also affirmed SLFL’s outstanding senior unsecured redeemable debentures at National Long-Term ‘A(lka)’.

Key rating drivers
SLFL is 100% owned by Sampath Bank PLC (SB, AA- (lka)/Stable). SLFL is rated two notches below its parent because Fitch classifies SLFL as strategically important to SB. This view is premised on SB’s majority ownership of SLFL, involvement in the strategic direction of SLFL through board representation, and the potential reputational repercussions on SB should it allow SLFL to fail.

The debentures are rated at the same level as SLFL’s National Long-Term rating of ‘A(lka)’, as they constitute direct, unconditional, unsecured and unsubordinated obligations of the company.

SLFL provides vehicle finance to customer segments, which are typically not serviced by banks. In 2013 SLFL contributed 30% of SB’s consolidated net lease portfolio (2012: 31%).SB has provided ordinary support to SLFL in the form of borrowing 22% of total borrowings and had guaranteed 13% of SLFL’s total borrowings as at December 2013 (2012: 22% and 33% respectively).

Rating sensitivities
SLFL’s rating may be downgraded if there is any change to SB’s ability or propensity to extend support. This may stem from a change to SB’s National Long-Term Rating or a significant weakening of linkages with SB – such as a dilution of SB’s majority ownership, or greatly reduced strategic involvement in SLFL.

SLFL may be upgraded if there is a significant increase in SLFL’s strategic importance to SB as indicated by closer strategic alignment between the two entities resulting in a consistent and sustainable higher group profits or closer operational integration, while remaining majority-owned by SB.

Any changes to SLFL’s National Long-Term rating would impact the issues’ National Long-Term rating.

SLFL accounted for 1% of the non-bank finance sector’s assets at end-August 2013.Fitch expects asset quality indicators to remain under pressure amid a challenging economic climate.

SLFL’s non-performing advances (NPA) in arrears for over three months and six months including interest in suspense increased to 7.5% and 3.2% of total loans in 2013 (2012: 3.3% and 1.8% respectively). The deterioration in NPLs was partly due to the exposures which have been adversely affected by poor weather and low business activity.

SLFL’s capitalisation measured as the ratio of Fitch Core Capital decreased to 12.9% at end-December 2013 (2012:18.9%). This ratio was low on account of high asset growth.

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NAMAL assets under management exceed Rs. 15 b

National Asset Management Ltd. (NAMAL) announced that Assets under Management surpassed Rs. 15 billion for the first time.

“NAMAL is proud to have achieved the Rs. 15 billion milestone by continuing the strong growth momentum witnessed in 2013 based on strong investment performance and a diverse product portfolio,” stated NAMAL Head of Sales and Structuring Charana Jayasuriya.

The flagship National Equity Fund (NEF) was the best performing Unit Trust in both 2012 and 2013. The NEF return of 17.1% in 2013 was the best of the 46 unit trusts in the industry according to data compiled by the Unit Trust Association of Sri Lanka.

NEF outperformed the CSE All Share Price Index (ASPI) by 12.30% in 2013 and has delivered an annualized return of 15.1% since inception in 1992.

NAMAL secured mandates from HSBC Pension Fund and Allianz Insurance in 2013 and provides discretionary portfolio management services to major international and local institutional investors and high net worth individuals.

NAMAL is Sri Lanka’s pioneer unit trust management company, having commenced operations in 1991, with a 22-year track record of successfully investing in the Sri Lankan equity and debt markets. NAMAL currently manages eight unit trusts including the flagship National Equity Fund and the only listed unit trust. Principal shareholders of NAMAL are Union Bank of Colombo PLC and DFCC Bank PLC. NAMAL was recently chosen as the Best Investment Management Company in Sri Lanka at the “Investment Management Awards 2013″ by World Finance, a leading financial publication of World News Media Ltd.
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Sri Lanka stocks at 5-week high; NDB deal boosts turnover

(Reuters) - Sri Lankan stocks rose on Thursday to their highest in more than five weeks led by telcos and diversified shares, with an inter-company deal in National Development Bank shares boosting turnover to a six-week high, ahead of a U.N. resolution on the country's human rights record.

The United Nation's human rights chief on Wednesday pressed for an international inquiry into alleged Sri Lankan war crimes, on the eve of a resolution critical of the island nation.

Concerns that the resolution could hurt the country's economy has dented investor sentiment, analysts said. Several potential buyers of risky assets are awaiting a clear direction.

The main stock index ended 0.7 percent, or 41.65 points, firmer at 5,992.62, its highest since Feb. 18.

"Everybody knows the resolution will be passed. But the market and investors want to know what will happen afterwards," a stockbroker said on condition of anonymity.

Turnover was 1.68 billion rupees ($12.85 million), the highest since Feb. 11, helped by 1.25 billion rupees from an inter-company deal in National Development Bank, which ended 0.5 percent up at 180.90 rupees.

Three stockbrokers said the deal was done by two companies within Softlogic Holdings PLC. Officials from Softlogic Holdings were not available for comment.

Top contributors to the day's gain were Sri Lanka Telecom PLC, which rose 5.16 percent to 46.9 rupees, and conglomerate John Keells Holdings PLC , which gained 2.20 percent to 222.80 rupees.

The Sri Lankan bourse saw a net foreign inflow of 40 million rupees worth of shares, but foreign investors have also been net sellers of 4.13 billion rupees worth of shares so far this year.

It had recorded a 22.88-billion-rupee inflow in 2013. 

($1 = 130.7000 Sri Lanka rupees) 

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

Sri Lanka stocks close up 0.7-pct

Mar 27, 2014 (LBO) - Sri Lanka's stocks close 0.70 percent higher Thursday with diversified John Keells Holdings and Sri Lanka Telecom gaining, brokers said.

The Colombo benchmark All Share Price Index closed 41.65 points higher at 5,992.62 up 0.70 percent. The S&P SL20 closed 13.10 points higher at 3,274.15, up 0.40 percent.

Turnover was 1.62 billion rupees, up from 762.29 million rupees a day earlier with 106 stocks close positive against 49 negative.

National Development Bank closed 90 cents higher at 180.90 rupees with off market transactions of 1.24 billion rupees contributing to 77 percent of the daily turnover.

Foreign investors bought 114.12 million rupees worth shares while selling 74.07 million rupees worth shares.

The Finance Company non-voting closed 40 cents higher at 6.20 rupees attracting most number of trades during the day.

John Keells Holdings closed 4.80 rupees higher at 222.80 rupees contributing most to the index gain.

JKH’s W0022 warrants closed 2.40 rupees higher at 65.90 rupees and its W0023 warrants closed 2.60 rupees higher at 69.70 rupees.

Sri Lanka Telecom closed 2.30 rupees higher at 46.90 rupees and Dialog Axiata closed 10 cents higher at 9.10 rupees.

Asiri Hospital Holdings closed 1.00 rupee higher at 21.00 rupees and Good Hope closed 138.80 rupees higher at 1,450.30 rupees.

Bukit Darah closed 16.90 rupees lower at 570.10 rupees and Ceylon Tobacco Company closed 2.00 rupees higher at 1,085.00 rupees.

George Steuart Finance closed 7.00 rupees lower at 66.10 rupees and Ceylon Investment closed 2.00 rupees lower at 75.00 rupees.

AIA Insurance Lanka closed 19.40 rupees lower at 270.30 rupees.

Union Assurance closed 1.30 rupees lower at 103.50 rupees with the company commencing a process to divest its general insurance business to a wholly owned subsidiary in line with the segregation requirements of the insurance regulator.

The proposed new company, Union Assurance General will be listed on the CSE later, the company said in a stock exchange filing.

Richard Pieris in Rs 3.5B debt issue

Ceylon FT: Richard Pieris and Company PLC yesterday (26) said it would issue debentures to raise Rs 3 billion, with an option to raise a further Rs 500 million.

In a stock exchange filing, the company said its board of directors had decided to issue 30 million rated, unsecured, redeemable debentures at Rs 100 each. The application in this regard has been submitted to the Colombo Stock Exchange.

The company intends to exercise an option of raising a total of Rs 3.5 billion upon over subscription of the initial offer.

The company posted a Rs 25.89 billion group profit for the nine months ended 31 December 2013, down 2% from a year ago.

Net profit fell 35% to Rs 1.11 billion.

Total assets of the group stood at Rs 32.05 billion as at end 2013, up from Rs 26.66 billion a year ago.
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Janashakthi Insurance notches Rs 1 billion PAT

By Sanath Nanayakkare

"Janashakthi Insurance has reached a milestone by achieving Rs. 1 billion profit after tax. This is a significant first time achievement by the company. At the same time, we have played a committed role as a useful corporate member for society at large," Janashakthi Insurance Managing Director Prakash Schaffter said while analyzing the company’s financial results for 2013 recently.

This achievement, according to financial data, reflects a 20% growth stemming from attractive returns generated by Janashakthi’s solid investment.

Building on this strong performance, Janashakthi Insurance has been able to deliver 22% Return on Equity to its shareholders as well as a net asset per share of Rs.12.48, reflecting a 34% year on year growth.

‘This strong growth with highest Profit After Tax of Rs.1 billion and the largest recorded customer base of 700, 000, have placed the company in a stellar position to meet the impending regulatory split in respect of life and general policies by 2015, he said.

The solvency margin of Janashakthi’s Life Insurance increased 440% of the required margin level and had increased to 710% by the end of 2013. Total assets of the company reached Rs. 18.65 billion in 2013 from that of Rs. 15.64 billion in 2012.

Janashakthi Deputy Chairman C.T.A Schaffter speaking at the event said," During the period of terrorism, policies issued by us covered victims of terrorism with no extra cost added to premiums. And when the tsunami struck, a great tragedy in the country, we paid insurance compensations to a great number of customers without adhering to all the stipulations written in the policies as it demanded so much of humanitarian concern. Our contribution to the development of rural athletes, and sportsmen and women in general has been enormous. Apart from that, we have contributed to the Lanka Jalani hydro-project, graduate internships and job creation for a wide range of young people.

In terms of innovation, Janashakthi remains a pioneer, launching a new worldwide travel insurance scheme which includes access to a 24-hour global hotline. The company has also partnered with Dialog eZ Cash, allowing customers to purchase insurance policies via their mobile phones.

Janashakthi supports almost 3,500 employees and agents with livelihoods and spends over Rs. 30 million a year on training and human capital development.
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