Sri Lankan shares slip from 12-week high

May 21 Sri Lankan shares edged down on Thursday, erasing early gains to slip from their highest close in nearly 12 weeks hit in the previous session, led by some illiquid large-caps such as Nestle Lanka Plc and Carson Cumberbatch Plc.

The main stock index fell 0.22 percent, or 16.08 points, to close at 7,273.69, slipping from its highest close since Feb. 27 hit on Wednesday.

Turnover was 1.68 billion rupees ($12.6 million), well above this year's daily average of about 1.14 billion rupees.

"The bourse dipped at the end of trading mainly due to losses in illiquid large-cap shares. Local participation outweighed foreign activity yet again with institutional and high networth investors buying into banking shares," said a stockbroker asking not to be named.

"Banking, financing and insurance sectors managed to record the highest turnover for the day," the source added.

Foreign investors were net sellers on Thursday for a second straight session, offloading 64.4 million rupees worth of shares on Thursday. But they have been net buyers of 5.94 million rupees worth of stocks so far this year.

A surge of 11.2 percent in Lanka ORIX Leasing Co Plc and Lion Brewery (Ceylon) Plc 's 15 percent rise was undercut by losses in Nestle Lanka Plc, which fell 1.79 percent, while Carson Cumberbatch Plc declined 13.5 percent.

The bourse hit its highest level in 12 weeks on Wednesday, led by financials on expectations of better quarterly earnings.

Political uncertainty due to Prime Minister Ranil Wickremesinghe-led UNP not having a parliament majority has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

The index has gained 5.6 percent since the rate cut through Wednesday. 

($1 = 133.6000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Prateek Chatterjee)

Sri Lanka’s Agalawatte Plantations losses soar

COLOMBO (EconomyNext) – Losses at Sri Lanka’s Agalawatte Plantations widened to 271 million rupees in the March 2015 quarter from a loss of 58 million a year ago as the firm was hit by the commodity price slump.

Sales of the firm, owned by the Mackwoods Group, fell percent to 527 million rupees over the period, a stock exchange filing said. The loss per share was 10.85 rupees.

The firm’s tea business suffered a loss of 91 million rupees compared with a profit of 14 million rupees the year before while the loss in rubber was almost 100 million rupees compared with a profit of 29 million rupees previously.

Oil palm was the only major crop that proved profitable, yielding a gross profit of 26 million rupees, up from 19 million rupees the year before.

Gross profit from other crops remained at around 10 million rupees.

Sri Lanka Treasury bill yields drop

Sri Lanka’s Treasury bill yields were down at Wednesday’s auction with 3-months yield dropped by 0.02 basis points and 6-month yields dropped by 0.03 basis points, data from the state debt office showed.

It was decided to accept 11,129 million rupees from the auction of 03 month yield from received 18,628 million rupees worth bills.

Treasury bills of 4,000 million rupees for 3 months, 6,000 million rupees for six months and 10,000 million rupees for twelve months were offered on an auction basis today.

6-month bill was closed at 6.19 percent and it was decided to accept 11,147 million rupees.

12-month closed at 6.31 percent and 6,035 million rupees were accepted from the auction.

The auction was oversubscribed with bids amounting to 63,906 million rupees being received.

It was decided to accept 28,311 million rupees from the auction. 

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Fitch Affirms Sanasa Development Bank at ‘BB+(lka)’/Stable

Mar 21, 2015 (LBO) – Sri Lanka’s Fitch Ratings Lanka has affirmed Sanasa Development Bank PLC’s (SDB) National Long-Term Rating at ‘BB+(lka)’ with a stable outlook.

The full report is reproduced below :-

KEY RATING DRIVERS

The rating captures SDB’s high exposure to the retail and lower-end SME segments, its weak asset quality, and pressure on capitalisation due to strong loan growth. The rating also reflects its above-average net-interest margins (NIM) stemming from its high-yielding loan book. The rating is constrained by SDB’s high costs, which ultimately limit profitability.

SDB’s loan book expanded by 17% in 1Q15, following growth of 44% in 2014 and 14% in 2013. Its Fitch core capital ratio declined to 13.96% at end-March 2015 from 14.90% at end-2014 and 14.27% at end-2013 despite an equity infusion in late 2014. This was primarily due to the rapid expansion of its loan book. Fitch believes that continued high capital consumption could lead to further deterioration in capital ratios, if internal capital generation proves insufficient or if there is no capital injection.

Of the bank’s gross loans at end-2014, 95% were to retail and SME customers, which, in Fitch’s view, are riskier in nature due to their greater vulnerability to economic cycles, and could to lead to an increase in the reported NPL ratio, which stood at 3.5% at end March 2015 (2014: 3.8%, 2013: 5.1%), should economic conditions worsen.

SDB’s loan-to-deposit ratio was also a casualty of rapid loan growth, crossing 100% in 2014 (2013: 97%) and higher than its peers. Deposits remained the primary source of funding, although its share in total funding declined to 87% at end-2014 from 93% at end-2013. Fitch believes that SDB will rely more on borrowings to fund its above-average growth in the future.

SDB’s return on assets improved to 1.92% in 1Q15 (2014: 1.49%, 2013: 0.91%) mainly due to higher NIM. Profit for 2014 was also supported by capital gains from the sale of stock investments. Fitch believes higher operating costs due to branch expansion and a potential increase in credit costs could hamper profitability.

RATING SENSITIVITIES

Aggressive loan growth that could increase capital impairment risks, either through greater unprovided NPLs and/or a continued deterioration in capitalisation without adequate internal or external capital augmentation, could lead to a downgrade of SDB’s ratings.

A rating upgrade is contingent upon fundamental improvements in its asset quality and moderation of its risk appetite while expanding its asset base.

Sri Lanka offers US$100mn in 1 and 3-year dollar bonds

COLOMBO (EconomyNext) - Sri Lanka has offered 100 million dollars in 1 year 1 month and 2 years 11 month bonds with bids to close on May 28.

The Sri Lanka Development Bonds styled offer will pay a coupon based on the six-month London Interbank Offered Rate.

The bonds can be bought foreign investors and qualified domestic resident companies and banks.

CIFL depositors want former Chairman arrested

Hiran H.Senewiratne

Central Investment and Finance (CIFL), has collapsed due to mismanagement under its former Chairman Deepthi Perera.

An aggrieved depositor said that CIFL's net asset value is lower than the last audit reports. "CIFL's latest audit report was prepared by KPMG, which audited the net assets of the company less than the current net asset value," the investor said.

The previous audit report prepared by KPMG has done the auditing estimation 80 percent less than the real estimated figures.

Therefore, CIFL's entire operations have come to a standstill but only two service points are in operation to recover all debts, sources said told the Daily News Business.Several depositors and other interested parties are working to obtain a court order to bring Perera back from overseas hiding and arrest him and hear this case.

According to well informed sources legal action will be initiated to explore possibilities of bringing back Perera to Sri Lanka.

The affected investors of the company have requested the Director Board to appoint two investors to the Board.It is said that around 5000 depositors are unable to reclaim the deposits that they have made since March 2013.

The CIFL Depositors' Association sources said Perera had defrauded Rs.1.6 billion from depositors' money.

The depositors' request that an immediate investigation be conducted and measures be taken to return their money.

CIFL also known as Central Investments and Finance under the supervision of the Central Bank of Sri Lanka collapsed in 2013.
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Janashakthi Insurance posts Rs 106m profit in Q1

Janashakthi Insurance has recorded a 13.4% growth in the first quarter, after setting up a new entity known as Janashakthi General Insurance Ltd.

Janashakthi Insurance Managing Director Prakash Schaffter said the group has posted a consolidated net profit of Rs 106 mn during the quarter ended 2015 in comparison to Rs 156 mn in the same period last year.

“The drop in profit was mainly due to the market to market loss of Rs 71 mn accounted during the period under review. However the subsequent bullish run of stock market enabled the company recover from this position. We are confident of improved performance in the future,”he said.

Janashakthi continued to build its brand equity and awareness in Q1 2015 by driving product innovations.

The new entity, which commenced operations on January 1, 2015, handles the Non-Life Insurance business. The parent company Janashakthi Insurance PLC, will act as the holding company engaging in the Life Insurance business.

Commenting on the performance for the first quarter of 2015, Janashakthi Insurance CEO, Jude Fernando said "At the end of first quarter Janashakthi delivered a Gross Written Premium of Rs.2.5 bn adding nearly 300Mn to GWP vs first quarter of 2014. This is a healthy start for the company and we hope to continue on this growth momentum"

The GWP of Janashakthi General Insurance Ltd, (the Non-Life Insurance segment) was Rs.1.9 bn compared to Rs.1.7 bn in the previous year, reflecting an overall growth of 12.0%. The changes made within the Life Insurance segment in 2014, has shown positive results. This is further validated with the Life insurance business recording a GWP of Rs.605 mn, growing the portfolio by 17.8% in first quarter 2015.
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NDB Bank to raise Rs 10b in debentures

The National Development Bank (NDB) hopes to raise a maximum of Rs 10 billion in debentures.

The bank will go for a debenture through the issuance of listed rated unsecured subordinated redeemable debentures amounting to Rs. 7.5 billion with an option to raise up to Rs. 10 billion subject however to obtaining all necessary regulatory approvals.A resolution has been adopted by the NDB Director Board to pursue with the said debenture issue.
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DFCC Vardhana Bank Q1 profits top Rs 336 m

DFCC Vardhana Bank PLC (DVB) recorded an impressive profit after tax of Rs.336.30 million for the first quarter of the financial year of 2015.

It's a 506.46% increase over the same period of the previous year. The bank's net interest income was recorded at Rs. 977 million, a 38.27% growth over the first quarter of the previous year.The bank's total operating income was Rs. 1.38 billion, a 43.54% increase over the first quarter of 2014.

These performances are a result of the pro-activeness of DVB's pricing of its asset and liability products in keeping with market conditions. Additionally, the strong growth that DVB recorded in itsloan book in the latter half of 2014, has contributed significantly to boosting its profits in Q1 of 2015.

The bank's success is also attributed to the effective management of operating costs which helped increase the bank's operating efficiencies, additionally its growth in total assets were recorded at Rs.107.88 billion.

Due to the bank's high performance and increased stability, the earnings per share for the first quarter of 2015improved to Rs. 1.18, from Rs 0.20 reported for the same period of the previous year.Additionally return on equity increased to 15.21% from 13.38% while the return on assets for the period under review was 1.30%, indicating a strong financial performance in Q1.

The bank managed to maintain its capital adequacy ratios, Tier I at 11.41% and Tier II at 12.22% which is well above the minimum regulatory requirements of 5% and 10% respectively.

DFCC Vardhana Bank CEO Lakshman Silva "Our growth in the first quarter of the financial year ending in 2015has helped us secure our position as the fastest growing commercial bank in the country. By offering competitively priced products and services, and by providing our customers with added value through exceptional standards of customer service,we have been able to achieve consistent growth and significant results."
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