Sri Lanka stocks slip; Keells, Dialog Axiata lead decline

(Reuters) - Sri Lankan stocks slipped for a second straight session on Tuesday, moving further away from a more than three-year high hit on Friday, led by conglomerate John Keells Holdings Plc and Dialog Axiata Plc .

The main stock index fell 0.09 percent, or 6.07 points, to close at 7,024.82. It rose to a more than three-year high of 7,034.09 on Friday.

"The market was dragged by Keells and Dialog shares. It will be slow for a while before it sees the next rally," said a stockbroker asking not to be named.

The index has gained nearly 18.81 percent so far this year. Analysts said low interest rates and continued foreign buying into risky assets had boosted sentiment.

The bourse has been in an overbought region since July. The Relative Strength Index, a momentum indicator tracked by chartists, was at 73.321 on Tuesday, Thomson Reuters data showed.

Stocks are deemed "overbought" above the 70-mark, which tends to signal a reversal in the near term.

Market heavyweight John Keells Holdings Plc, which led the overall fall in the index, fell 0.76 percent to 247.6 rupees, while Dialog Axiata Plc fell 1.77 percent to 11.30 rupees.

Tuesday's turnover stood at 1.09 billion rupees ($8.37 million), slightly below this year's daily average of 1.2 billion rupees.

Foreign investors were net buyers of 21.3 million rupees worth of shares on Tuesday, extending the year-to-date net foreign inflows to 8.26 billion rupees.

($1 = 130.1800 Sri Lankan rupee) 

(Reporting by Ranga Sirilal; Editing by Anupama Dwivedi)

Fitch Rates National Savings Bank's Senior Notes 'BB-(EXP)'

September 02, 2014 (LBO) - Fitch Ratings has assigned Sri Lanka-based National Savings Bank's (NSB; BB-/Stable) proposed issue of US dollar-denominated notes an expected rating of 'BB-(EXP)', the rating agency said in a media release.

FITCH MEDIA RELEASE

The final rating is contingent upon receipt of final documents conforming to information already received.

The proceeds are to be used for general corporate purposes.

KEY RATING DRIVERS

The notes are rated at the same level as NSB's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BB-' as they rank equally with the bank's other senior unsecured obligations.

NSB's IDRs are based on the government of Sri Lanka's (BB-/Stable) high propensity but moderate ability to provide extraordinary support to the bank, if needed. The state's moderate ability to provide support is reflected in the sovereign rating. The bank's Outlook reflects the Stable Outlook on Sri Lanka's sovereign rating.

Fitch believes that state support for NSB stems from its policy mandate of mobilising retail savings and investing them in government securities. Its ratings also reflect preferential state support to the bank in the form of the explicit guarantee for its deposits contained in the NSB Act.

Fitch is of the view that the authorities would support depositors and senior unsecured creditors of NSB to maintain confidence and systemic stability in case of need, even though the NSB Act only contains an explicit deposit guarantee.

RATING SENSITIVITIES

Any change in Sri Lanka's rating or to the perception of state support to NSB could result in a change in NSB's IDRs and hence the rating of the notes.

NSB's ratings are:

Long-Term Foreign Currency IDR: 'BB-'; Outlook Stable

Long-Term Local Currency IDR: 'BB-'; Outlook Stable

Short-Term Foreign Currency IDR: 'B'

Support Rating: '3'

Support Rating Floor: 'BB-'

US dollar senior unsecured notes: 'BB-'

National Long-Term Rating: 'AAA(lka)'; Outlook Stable

Sri Lanka stocks close down 0.1-pct

Sep 02, 2014 (LBO) - Sri Lanka's stocks close 0.09 percent lower with telco and diversified stocks losing ground amid continued low foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 6.07 points lower at 7,024.82, down 0.09 percent. The S&P SL20 closed 2.89 points lower at 3,874.50, down 0.07 percent.

Turnover was 1.09 billion rupees, up from 1.04 billion rupees a day earlier with 81 stocks closed positive against 113 negative.

Sinhaputhra Finance closed 90 cents lower at 239.10 rupees with two off-market transactions of 432.78 million rupees changing hands at 275.00 rupees per share contributing 40 percent of the daily turnover.

Commercial Credit and Finance closed 1.80 rupees higher at 36.00 rupees and Seylan Bank non-voting closed 1.80 rupees higher at 52.00 rupees, attracting most number of trades during the day.

Foreign investors bought 77.92 million rupees worth shares while selling 56.64 million rupees worth shares.

John Keells Holdings closed 1.90 rupees lower at 247.60 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 50 cents higher at 70.50 rupees and its W0023 warrants closed 30 cents lower at 78.70 rupees.

Dialog Axiata closed 20 cents lower at 11.10 rupees and Sri Lanka Telecom closed 50 cents lower at 53.70 rupees.

Touchwood’s present position of liquidation

Touchwood Investments PLC (under liquidation) yesterday presented its position to the CSE, providing details on its Assets, Liabilities and Total Deficiency.


Total of Assets Rs. 694,950, 527.17

Liabilities including ordinary and preference shares Rs.1,075,782,445. 00

Total Deficiency Rs. 380,831,917.83

The company has not submitted books of accounts to the Liquidator.

Next date of hearing will be September 19, 2014.
www.island.lk

BOC 1H net up 23% to Rs 6.2B

Ceylon Finance Today: Bank of Ceylon, the largest state owned bank in the country, has posted a net profit of Rs 6.2 billion during the first half of this year, up 23% compared to Rs 5 billion a year ago, despite the significant interest rate pressures and slowdown in credit growth. The bank which celebrated its 75-year anniversary recently posted a profit before tax of Rs 8.6 billion, up 20% from 7.2 billion in the same period last year.

"In its75 year history BOC has served all sectors of the country while preserving the number one position in advances, deposits, assets, profit and inward remittances as Sri Lanka's imperative financial institution," the bank said in a statement.

"Despite the significant interest rate pressures and slowdown in credit growth which was common to the industry during the period under review, the bank was able to cope with the declining interest margins through upward trends in fee based income, investment income, and the reduction of impairment charges on non-performing assets.

Increase in income generated from issuing guarantees and bills acceptance has contributed to the increase in fee income by Rs1.3 billion resulting in a 49% growth year on year (YoY).

Simultaneously net gain from trading of investment securities also contributed Rs 2.4 billion to the income showing 54% growth YoY and this fact shows the resilience of the bank in finding alternative income sources in challenging times. Meanwhile, interest expense has come down by 5% to Rs 36 billion due to the improvement of current and savings accounts (CASA) ratio along with the reprising of term deposits at lower interest rates."

"The bank's assets grew by 5% to Rs 1.3 trillion continuing its position as the only domestic bank having a trillion assets balance sheet. The growth of the assets was mainly due to the increase of the fund base and financial investments. Even though, asset growth was at a moderate level, it was on par with the industry trends and BOC continued to secure its market leadership in terms of advances, deposits and profits."

"Bank of Ceylon is the largest provider of capital to both the private and public sector, accounting for 21% of the banking industry's total loans and advances. Gross loans and advances to customers represented 60% of total assets of the bank. Net loans and advances stood at Rs 698 billion after adjustments for foreseeable losses as per Sri Lanka Accounting Standards and Financial Reporting Standards. The bank's loan portfolio other than pawning advances and overdraft marginally increased by 6% compared to December 2013."

"BOC is not an entirely profit oriented entity and has taken drastic action from time to time to help the national economy. Pawning rates have been reduced substantially, in order to stimulate credit growth in the country, thereby discharging its role as a national bank. Impairment charges for 1H 2014 had declined by 39% or Rs 1.4 billion over corresponding 1H period of last year.

Held to maturity the portfolio of the bank also increased by 32% to Rs 206 billion compared to the previous year end with the rise in investment in government securities. Further increase in cash and short-term funds by 59% and reverse repurchase agreements by 85% reflect the lower credit appetite in the market which is evident through the declining loan growth in the industry."

"Deposits account for 74% of the bank's liabilities as at end of 1H 2014. Bank of Ceylon is the market leader for deposits and has a market share of 20%. Deposits in foreign currency accounted for 26% with the remaining 74% being in local currency. The total customer deposit base grew from Rs 842 billion in December 2013 to Rs 876 billion at the end of June 2014. Deposit growth rate of 4% which is in line with the industry growth rate of 5% reflects the strong domestic franchise of the bank. This growth was achieved in the midst of significant interest rate margin pressures. CASA ratio also has been improved to 41% from 38% at last year end due to reprising the deposit mix in a favourable way."

"Both return on assets (ROA) and return on equity (ROE) ratios increased to 1.40% and 20.62% respectively, compared to the corresponding 1H period of last year in line with the increase of profit."

"Both Tier I and Tier II capital adequacy ratios stood at 8.49% and 12.06% showing an increase against 7.85% and 10.88% in the 1H of 2013. The bank is aware of the need to strengthen its Tier I capital in view of the expected future growth and is working with a range of possible alternatives to improve this critical ratio and keep it always well managed above the minimum requirement of the Central Bank."

"The bank's domestic liquid asset ratio was 30% as at end June 2014 while the offshore liquid asset ratio was 27%. Both ratios have exceeded Central Bank's required benchmark of 20%."
www.ceylontoday.lk

Sri Lanka John Keells Holdings opens 'Cinnamon Red'

September 02, 2014 (LBO) – Sri Lanka’s John Keells Holdings opened 243 - room , lean luxury ,business hotel Sri Lanka's capital Colombo yesterday (Sept 01) with an investment about 3.5 billion rupees officials said.

“As much as Cinnamon Red signifies the creation of a new tier within the Cinnamon Hotels and Resort Brand, it has also created an impetus for a brand new tier in Sri Lanka’s hospitality industry,” Ajit Gunewardene, Deputy Chairman of John Keells Holding said.

“Thus far, city properties in Sri Lanka have been positioned within the traditional framework of a star rating or as budget hotels, competing on price,”

“The concept of lean luxury being introduced by Cinnamon Red echoes the global hospitality curve and will fill a much need void between these two broad niches that the current hospitality industry subscribe to. It boldly breaks traditional norms offering guests a unique different experience with affordability, efficient service and comfort.”

The three star hotel which has 242 standard rooms and one suite plans to sell rooms at around 75 to 210 US dollars according to the website.

The hotel is located at Ananda Coomaraswamy road, Colombo 03 which was formerly Green Path.

Cinnamon Hotels and Resorts will have 14 hotel properties and over 2,400 rooms with the new addition.

Sri Lanka has reported arrivals of 1.27 million in 2013 up 26 percent from a year earlier. Arrivals were also up 24.6 percent to 727,353 in the first half of 2014.