Sri Lanka stocks rise to 2-month high on financials, foreign inflow

(Reuters) - The Sri Lankan share index rose to a near two-month closing high on Wednesday, led by financial shares such as Ceylinco Insurance Plc, while heavy foreign buying in the island nation's risky assets also boosted sentiment.

The main stock index closed 0.19 percent, or 11.39 points, firmer at 6,083.55, its highest close since Feb. 12.

Analysts expect the market to gain further due to prevailing lower interest rates.

Brokers say the $19.50 billion worth stock market is gradually attracting investors who are looking for higher returns as the deposit rates in banks and financial companies are not beyond 6-6.5 percent.

The day's turnover was 1.32 billion rupees, well above this year's daily average of 1 billion rupees.

The bourse saw net foreign inflows of 793.4 million rupees, though foreigners have net sold 8.5 rupees worth of shares so far this year.

Analysts, however, said foreign investor sentiment is yet to recover after the United Nations on March 27 announced it would probe alleged war crimes by the island nation.

The bourse has suffered 4.37 billion rupees in foreign outflows in the nine sessions since March 28 due to the exit of a large foreign fund.

Shares in Ceylinco Insurance gained 4.18 percent to 1,390.10 rupees, with 928 shares changing hands.

The United Nations has launched an inquiry into war crimes allegedly committed by both Sri Lankan state forces and Tamil rebels during a conflict that ended in 2009, saying the government had failed to investigate properly.

Analysts said the outcome of the resolution was expected, but investors' sentiment has been dented over concerns it could hurt the country's economy. Several potential buyers of risky assets are waiting for a clear direction. 

($1 = 130.5950 Sri Lanka Rupees)

(Reporting by Shihar Aneez; Editing by Anand Basu)

Sri Lanka Treasuries yields steady

Apr 09, 2014 (LBO) - Sri Lanka's Treasuries yields were eased down one basis points across maturities with at Wednesday's auction with the 3-month yield reaching 6.63 percent, data from the state debt office said.

The six month yield fell 01 basis point to 6.81 percent and the 12-month yield fell 01 basis point to 7.04 percent.

The debt office said it sold 500 million rupees in 3 and 6-month bills and 9.3 billion rupees in 12-month bills.

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http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140409e.pdf

Sri Lanka's Odel spends Rs800 Million for Colombo 7 land

Apr 09, 2014 (LBO) - Odel Plc, a unit of Parkson Retail Asia said it has bought land next to its main outlet in Sri Lanka's capital Colombo for 800 million rupees.

The fashion retailer said in a stock exchange filing, that the land would be used to build a 'flagship mall' in Colombo.

The extent of the in the upmarket Colombo 7 district, was not disclosed.

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http://www.cse.lk/cmt/upload_cse_announcements/4961397039072_.pdf

Sri Lanka shares close up 0.2-pct

Apr 09, 2014 (LBO) - Sri Lanka's shares close up 0.19 percent higher with index heavy stocks gaining amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 11.39 points higher at 6,083.55 up 0.19 percent. The S&P SL20 closed 19.26 points higher at 3,345.96, up 0.58 percent.

Turnover was 1.32 billion rupees, up from 645.14 million rupees a day earlier with 107 stocks close positive against 62 negative.

Seylan Bank closed flat at 63.50 rupees with four off market transactions of 554.50 million rupees contributing to 42 percent of the daily turnover.

All off market transactions accounted for 55 percent of the turnover.

East West Properties closed 40 cents lower at 12.60 rupees and Sanasa Development Bank closed 4.60 rupees higher at 78.30 rupees, attracting most number of trades during the day.

Foreign investors bought 811.75 million rupees worth shares while selling 18.30 million rupees worth shares.

Lion Brewery Ceylon closed 18.00 rupees higher at 390.00 rupees and Ceylinco Insurance closed 55.80 rupees higher at 1,390.10 rupees.

Bukit Darah closed 10.60 rupees higher at 574.80 rupees and John Keells Holdings closed 1.10 rupees higher at 239.90 rupees.

JKH’s W0022 warrants closed 10 cents lower at 69.20 rupees and its W0023 warrants also closed 10 cents lower at 73.10 rupees.

Ceylon Tobacco Company closed 23.90 rupees lower at 1,051.00 rupees and SLT closed 1.30 rupees lower at 47.60 rupees.

EPF grows 13.6% in 2013, interest paid to members lowest since 2007

Ceylon FT: The country's largest superannuation fund, the Employees' Provident Fund (EPF), grew 13.6% to Rs 1.3 trillion in 2013, up from Rs 1.14 trillion the previous year, the Central Bank's 2013 Annual Report showed.

The number of member accounts grew 2.7% to 15 million with contributing member accounts growing 4.3% to 2.4 million.

Total contributions to the fund amounted to Rs 80.5 billion in 2013, up 14.7% from 70.2 billion the previous year, and refunds grew 3.1% to Rs 50.2 billion.

Total income on investments grew to Rs 136.65 billion in 2013, up from Rs 121.4 billion the previous year.

Interest income grew to Rs 105 billion, from 90.9 billion the previous year.

Capital gains from equity investments fell to Rs 113 million in 2013, down from Rs 1.02 billion the previous year.

Dividend income grew to Rs 3.22 billion, up from Rs 1.99 billion the previous year.

The EPF has not issued an annual report since 2010.

The fund's investment portfolio consists of 92.5% in government securities and 5.8% in listed stocks and 1.2% in corporate debt.

With market interest rates remaining high throughout 2013, the fund was captive source of cheap funds.

Workers were paid an effective interest rate of 11.14% on the EPF balances in 2013, the lowest since 2007.
www.ceylontoday.lk

Central Bank reports Rs 24B loss

By J. Kurukulasuriya

Ceylon FT: The Central Bank of Sri Lanka released its Annual Report for the year ended 31 December 2013 yesterday, which discloses a loss of Rs 24, 264 million, as against a gain of Rs 66,208 million in the previous period. In carrying out the audit of the Central Bank's accounts, the Auditor General required the services of a firm of Chartered Accountants in public practice, mainly to examine the compliance with International Financial Reporting Standards.

This could be attributed to the loss arising from unrealized price revaluations, which increased by Rs 27,596,358, a fall in the Central Bank's interest income of Rs 11,507 million (44%), coupled with an increase in interest expenses, net foreign exchange losses of Rs 1,577 million over the previous period, and fall in 'other income'.

The bank incurred a net gain of Rs 4,219 million as sterilization gain (2012 - Rs 1,695 million), in its activities to absorb excess liquidity in the market.

The bank's overall salaries and wages bill showed a significant increase. Salaries and wages increased 9.5 % to Rs 3,138 million, and 'additional contributions to Post Employment Benefit Plan Costs'were up about 477% to Rs 1,988 million. Bank employees are entitled to staff loans at concessionary interest rates. The bank also operates five defined benefit plans for employees, who joined before 1 January 1998. The cost of benefits is wholly borne by the bank. It also has a post- employment medical benefit scheme for expenses incurred by retired employees.

The bank employed an independent foreign actuary K. A. Pandit of Bombay, to re-assess their defined benefit obligations. The total fair value of plan assets fell short of the present value of benefit obligations, by Rs 4,936 million. The income of the bank is exempt from tax under Section 118 of the Monetary Law Act. The bank is also exempt from VAT and Economic Service Charge (ESC) tax, but it pays withholding tax on dividend income at 10%. During the period an amount of Rs 1,986 million was spent in relation to such withholding tax, paid on interest income of Rs 13,897 million, and dividend income.

The Bank Supervision Department of the Central Bank is entrusted with the "continuous supervision and examination of banks", as per Section 28 of the Monetary Law Act, which includes resolution of "weak banks", to ensure stability of the banking sector. At the end of 2013 there were 24 licensed Commercial banks,and nine licensed specialized banks in operation. The CB intends to reduce this number, as a matter of policy.

The supervision of banks is based on the standards set out in the Basel Committee on Bank supervision, an international Body.

As at 31 March 2013 the Central Bank's exposure to foreign currencies was Rs 968,417 million as total foreign currency financial assets. This was mainly demarcated in Australian dollars (21%) and US dollars (13%). Total foreign currency liabilities were Rs 544,242 million of which 78% was in the form of SDR's – Special Drawing Rights. Net foreign currency exposure was therefore Rs 424 million.

At 31 December 2013 the bank had capital commitments of Rs 7.95 million and US dollars 1.805 million.
www.ceylontoday.lk

‘Exemplary performance’ by Amãna Takaful in 2013

Amãna Takaful has concluded yet another significant year of achievement, recording an impressive Profit After Tax of Rs. 117 Mn for 2013, representing an eight fold increase over the previous year's restated profits. Following its turnaround in 2012, the company has consistently demonstrated its capability in improving results supported by all aspects of its business.

Taking into consideration the challenges faced in the operating environment by extraneous circumstances in early 2013, Amãna Takaful continued its track record of growth in both Life and General segments of the business. Consolidated Gross Written Premium (GWP) of Rs. 1.9 Bn showed an increase of 19.7% over 2012. This growth is twice the industry pace, a feat the company has consistently achieved in the last 3 years. Individually, GWP of the General and Life segments of the business recorded Rs. 1.32 Bn and Rs. 543 Mn respectively. The Life business growth was balanced with new subscriptions between the Regular Portfolio and Prosper, with the wealth management product growing collectively by almost 50% over 2012. The motor and non-motor classes improved by 9.8% and 13.3% respectively. Motor class achieved product-line profitability for the first time in a full year while all other classes continued their profit momentum.

Commenting on the achievements for the year 2013, CEO of Amãna Takaful Fazal Ghaffoor stated: "While the Life segment contributed to our overall growth in volume, the modest increase in the General segment contributed largely to profits. This was possible mainly due to our ability to hold price, in addition to productivity gains and efficiency improvements, despite pressure on margins."

Commenting further on the General segment's performance, Ghaffoor continued, "The net claims experience was Rs. 595 Mn, which is 2.9% over 2012. Industry-wide, Amãna Takaful has a record of a relatively low claims ratio, attributable to astute claims management due to prudent underwriting and risk assessment. This is reflected in our claims ratio of 54.2% for the segment, which is the lowest amongst the insurance players who are listed in the Colombo Stock Exchange. The combined ratio of the segment is 97% and as a consequence the risk fund is in surplus for the second successive year, enabling the Company to distribute a surplus to non-claimant participants this year too. This keeps in line with our momentum in 2012 where we distributed a surplus of 12.5% to all non-claimant participants."
(Amana release)
www.island.lk