Sri Lankan shares jump 1.4 percent as investors buy in oversold bourse

(Reuters) - Sri Lankan shares rose 1.4 percent on Wednesday to their highest close in nearly one week as investors bought risky assets across the board in an oversold market.

Foreign investors bought a net 72.6 million rupees ($546,275) worth of shares, marking their first net buy in eight sessions and extending the net buying this year to 2.98 billion rupees.

The main stock index lost 7.31 percent in the 21 sessions through Monday and hit a more than eight-month closing low as investors offloaded their holdings to settle margin trading and on concerns about political stability.

The index ended 1.4 percent, or 95.74 points, firmer at 6,916.08 on Wednesday, its highest close since March 26.

"Across the board buying was there today. Slowly buying came into the market," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"The positive sentiment will continue, but with the holiday season we may not see high volumes."

The market's 14-day Relative Strength Index (RSI) had fallen below 30 on March 30, Thomson Reuters data showed. A level of 30 or lower indicates the market is oversold. On Wednesday, it rose to 36.148 from Tuesday's 22.425.

Analysts expect trading to stay thin through mid-April ahead of a long traditional Sinhala-Tamil New Year holiday and amid political uncertainty.

Shares in Ceylon Tobacco Company Plc rose 2.55 percent, while Dialog Axiata Plc jumped 4.81 percent.

The day's turnover was 616.5 million rupees ($4.64 million), more than half of this year's daily average of 1.17 billion rupees. 

($1 = 132.9000 Sri Lankan rupees) 

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

Controversial director at Sri Lanka's Commercial Bank resigns

COLOMBO (EconomyNext) - Lakshman Hulugalle, a director of Commercial Bank appointed during the last regime in controversial circumstances, has resigned.

Hulugalle's appointment was made with the ousting of a respected professional banker, Ranjith Fernando, raising concerns.

Under the current regime, similar concerns have been raised after Sunil Wijesinghe, a respected business leader was asked to resign from National Development Bank.

Unions of Commercial Bank have raised strong concerns at an alleged attempt to appoint a government nominee as Chairman of the board.

New appointments to private banks to end cronyism: Harsha

The new government will be appointing its own directors to commercial banks to end the cronyism practiced by the previous regime, according to the Policy Planning and Economic Affairs Deputy Minister. 

The United National Party, when in the opposition, had severely criticized the past regime for appointing their supporters to privately run commercial banks as directors to gain board control. 

Mirror Business inquired from Policy Planning and Economic Affairs Deputy Minister Dr. Harsha de Silva as to why the new regime is also following the same channels of appointment. 

“What else can we do? We will clean the house of corruption,” he stressed. 

Last week, Hatton National Bank (HNB) Chairperson Dr. Ranee Jayamaha and National Development Bank PLC (NDB) Chairman Sunil Wijesinha announced their resignations, with Wijesinha saying that the Finance Minister had expressed his wish to restructure the NDB board. 

However, Dr. de Silva said that the state will not pressure any board member to resign but only forward candidates to the shareholders. Meanwhile, he said that the Employees’ Provident Fund (EPF), one of the tools through which the state maintains power over the banks, would be moved out of the Central Bank—the banking sector regulator— and made independent, since it represents a conflict of interest. 

“That is incestuous. What they have done is incest,” Dr. de Silva said. (CW)
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NSB reaches a proud moment in its 43 year history

NSB recorded the highest ever profit before tax of Rs. 10.5 billion for the year ended 31st December, 2014, an increase of 360% from previous year. The net profit after tax was recorded at Rs 6.9 billion, a 480% increase.

Bank mobilized Rs. 59.4 billion of deposits during the year and deposit base of the Bank recorded a growth of 10.4%. Savings deposits accounted for 44% of the total mobilization which is a significant improvement in its deposit mix of the Bank. The total deposit base of the Bank stood at Rs 554 billion as at 31st December, 2014.

Total assets also recorded a healthy growth of 19.1% and now stands at
Rs 779.5 billion as at 31st December, 2014. This growth was mainly supported by a strong growth in deposits and an issuance of a US$ 250 million bond. Loans and advances recorded a growth of 41% compared to industry growth of 13.7% during the period under review.

Despite the decline in market interest rate scenario which was prevalent for most part of the year, the interest income of the Bank stood at Rs. 74 billion, another record in its 43 year history. Higher growth in interest income and marginal decrease in interest cost helped the Bank to a 112% growth in net interest income to reachRs. 21.4 billion.

Return on average assets improved as well to reach 1.5% for the year 2014, a substantial increase from 0.4% the previous year. Prudent management of cost enabled the cost income ratio of the Bank to be lower at 44.5% as compared to 67.7% for 2013. Bank's regulatory capital adequacy ratios are also well placed with Tier 1 ratio of 20.5% and total capital ratio at 19% which is another significant improvement from the previous year. The liquidity ratio too is well above the regulatory minimum and stands at 91.5%.

The Group's pre tax profit increased by 303% to Rs. 10.8 billion as at the end of 2014 from Rs. 2.7 billion recorded at the end of 2013.

During the year under review the Bank introduced several new products in keeping with its promise to broad base its customer network. 'NSB DiviSurekum' Pension plan was one such product, which was introduced to cater to the financial needs of all senior citizens, to assist this segment to a peace of mind and betterment of living standards.

TwoPersonal Loan schemes namely, 'NSB Buddhi' and 'NSB Diriya' were introduced during the year to help students seeking higher education both locally and overseas and the SME sector, respectively.

Further widening its reach, the Bank added 7 new branches to reach a branch network of 236 by end 2014.

In another noteworthy highlight, the Bank was reaffirmed with the AAA local credit rating for the 12th consecutive year by Fitch Ratings Lanka. NSB is the first Sri Lankan Bank to receive AAA credit rating from Fitch and to maintain the same for 12 consecutive years. 

International credit ratings of the Bank which is in par with the sovereign rating was reaffirmed in July 2014. The Bank obtained International Credit Rating for the first time in 2003 from Fitch Rating (BB-) stable and S&P rating (B+) stable.
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NEF declares higher dividends for CY14

National Asset Management Limited (NAMAL) paid a dividend of Rs.1.50 per unit to the Unit holders of the flagship National Equity Fund (NEF) for the year ended 31st March 2015.

Avancka Herat, Executive Director and Chief Investment Officer of NAMAL, stated that "NEF generated a total return of 33.3% in CY14, outperforming the CSE All Share Price Index (ASPI) by 9.93%. The equity market benefited from sound economic fundamentals, political stability, strong Corporate earnings and positive direct inflow by foreign Institutional funds and enabled NAMAL equity funds to deliver superior returns to its investors".

He further stated that the fund has now achieved an impressive long term track record in the last 23 years with a CARG of 15.44% (on a dividend reinvestment basis) since its inception in December 1991. NEF currently has Rs. 2.4 billion Assets Under Management (AUM) and the fund has paid dividends annually since inception, at a historical average of Rs. 1.21.

NAMAL is Sri Lanka’s first unit trust management company, having commenced operations in 1991, with a 23-year track record of successfully investing in the Sri Lankan equity and debt markets. NAMAL currently operates nine 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.

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