Ceylon Printers to raise Rs30mn through rights issue

(LBO) – Sri Lanka’s stationery merchants and printing firm, Ceylon Printers is to raise 30 million rupees by way of a rights issue, the company said in a stock exchange filing.

Subject to the necessary approvals, the company is to issue 25 thousand shares at 1,200.00 rupees each in the ratio of 5 for every 7 shares.

The proceeds will be utilized to invest in the expansion and the upgrading of company’s printing and packaging facilities.

Accordingly, the board has made a special resolution, subject to the necessary shareholder approval to purchase machinery worth 30 million rupees through the funds raised by the rights issue.

The stock closed at 1,800.00 rupees on Thursday.

Sri Lanka Com bank joins Dialog mobile money venture

ECONOMYNEXT – Commercial Bank of Ceylon has joined ‘eZ Cash’, Sri Lanka’s mobile money service, enabling customers to withdraw cash from selected ATMs island wide.

With this facility, in addition to the 16,000 retail points, eZ Cash account holders can withdraw money at their convenience from any Commercial Bank ATMs displaying the eZ Cash logo, a statement said.

The minimum withdrawal value is 100 rupees and the maximum is 5,000 rupees during a single transaction.

eZ Cash was launched in June 2012 by Dialog Axiata, enabling subscribers to send and receive money directly via mobile, and do utility and institutional payments.

With the advent of the Etisalat and Hutch mobile phone firms on to the network, eZ Cash has grown to a subscriber base of two million Sri Lankans with over 20,000 agent locations and merchant points island wide.

Commercial Bank operates the country’s single largest ATM network, and the largest online 24-hour cash-dispensing system in the country.

Sri Lanka's DFCC Bank, DVB shareholders approve merger

ECONOMYNEXT – Shareholders of Sri Lanka's DFCC Bank and its commercial banking subsidiary, DFCC Vardhana Bank, approved their merger from October 01 at an extraordinary general meeting Friday.

Shareholders of DVB, other than DFCC, are to be paid 52 rupees a share in lieu of their shareholding in DVB as at the date of amalgamation, a stock exchange filing said.

The merged entity will go as DFCC Bank Plc. DFCC started as a World Bank backed development lender.

Sri Lankan shares rise for third day; investors snap up battered stocks

Reuters: Sri Lankan shares rose more than 1 percent on Friday, rising for a third straight session, as investors bought into select battered stocks like conglomerate John Keells Holdings Plc after recent falls.

The main stock index ended 1.06 percent, or 77.38 points, higher at 7,350.52, moving further away from its lowest close since July 23 hit on Tuesday.

The index had lost 3.2 percent in the two sessions through Tuesday as foreign investors sold off risky assets on fears of a China - led global economic slowdown, and on selling by retail investors for month-end settlements.

"Some recovery is taking place, but not at full scale," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd. "There is selective buying of some of the stocks that fell sharply during the past few days."

Foreign investors were net sellers of 175.5 million rupees ($1.31 million) worth of shares on Friday, extending the year-to-date net foreign outflow to 3.38 billion rupees.

Turnover stood at 1.06 billion rupees, less than this year's daily average of 1.17 billion rupees.

Shares of John Keells jumped 3.20 percent, Ceylon Tobacco Company Plc rose 2.04 percent, Sri Lanka Telecom Plc gained 2.97 percent and Dialog Axiata Plc advanced 0.88 percent. 

($1 = 134.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Subhranshu Sahu)

Financial sector consolidation set to improve further

The coming year looks set to bring further consolidation to Sri Lanka’s financial sector, with market forces expected to drive the trend,the Oxford Business Group said.

Last year saw the the Central Bank of Sri Lanka (CBSL), take steps to bolster the sector’s operating environment by promoting consolidation amongst the country’s banks and non-banking financial institutions (NBFIs).

The CBSL had targeted a sector of around 20 NBFIs upon completion, roughly one-third of the 58 operating when the master plan was published. The roadmap also outlined higher minimum capital requirements for commercial and specialised banks, with a focus on the adoption of risk management best practices.

Progress thus far has been fair, with seven NBFIs completing some form of consolidation as of the end of last year; however, most of the benchmarks set out in the plan have yet to be achieved,the OBG said. A planned merger between DFCC Bank and National Development Bank (NDB), agreed to in early 2014, was called off in May, and most other consolidation has been limited to small NBFIs or subsidiaries of larger banking groups.

State pressure for lenders to consolidate was largely replaced by market momentum – an approach favoured by many analysts – with the victory of the United National Party in the parliamentary elections expected to reinforce this more hands-off approach. Officials from the CBSL told local media in May that the consolidation process would be part of the new administration’s long-term economic policy, to be carried out in a more systematic manner.

Many industry players agree that while consolidation is needed, the sector will be better served if market forces dictate the process. In particular, market-driven consolidation could help avoid accumulation of weak assets amongst non-banking institutions forced to merge. However, others in the industry see a place for guided consolidation, especially if the interests of stakeholders are not being protected by the market.

Signs that market forces are already at work are in evidence, with DFCC Bank and DFCC Vardhana Bank announcing plans in May to combine their operations. The news came just one week after the lenders called off the planned merger with NDB.Financial sector consolidation is expected to further improve the credit profile of Sri Lanka’s financial institutions, Fitch noted, strengthening franchises and reducing supervisory burdens.

Consolidation would be beneficial to the sector in the long term, while being credit neutral in the short to medium term, the report found.

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Asia, Middle East, Africa and Latin America and the Caribbean.
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Fitch maintains Ceylon Income Fund on Watch Negative

Fitch Ratings has maintained the ‘(A(lka))’ National Fund Credit Quality Rating of the Ceylon Income Fund on Rating Watch Negative.

The National Fund Volatility Rating is ‘V-NR’.

The maintenance of the RWN is driven by an increase in the proportion of the fund rated only by Lanka Rating Agency (LRA) following redemption activity in the fund.

The Securities and Exchange Commission of Sri Lanka issued a statement in July 2015 saying that LRA is not entitled to assess, evaluate or review the creditworthiness of listed securities or securities to be listed.
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BoC leads first half growth with Rs. 6.7 b profit

The Bank of Ceylon (BoC) continued to lead its growth course in first half of 2015 with Rs. 9.1 billion Profit Before Tax (PBT) achieving 6% growth over the previous year.

Profit After Tax (PAT) stood at Rs. 6.7 billion resulting in 8% growth. \The Group reported Rs. 9 billion PBT resulting in 5% growth over the corresponding period of the previous year and the Bank dominates the results of the Group accounting for 96% of total earnings and 97% of the Group’s assets.

Total operating income for the period stood at Rs. 31 billion and shows a 24% increase which has been accelerated through 52% growth in net interest income and 53% growth in other operating income.

Net interest income has increased due to higher interest income complemented by a 12% reduction in interest expenses depicting a greater efficiency in deposit mix management by the Bank which has contributed to improve the Net Interest Margin (NIM) by 36% to 3.4% on YoY basis.

Despite the increase in personnel expenses, the Bank has been able to maintain other expenses 17 % lower than those of the corresponding period in 2014, allowing only a marginal increase of 2% in total operating expenses.

BoC has grown its total assets by a further 6% to Rs.1.4 trillion as of end June 2015.

Loans and advances accounted for 56% of the Bank’s total assets base and gross loans stood at Rs. 837 billion.

Recovering from the slow credit growth in 2014, the loan book has grown by 8% during the first half of 2015. The investment portfolio also showed an upward movement due to increased investment and treasury activities.

Deposits accounted for 71% of the Bank’s liabilities as at end June 2015 and showed a marginal increase of 1% compared to the end 2014 position which is an 8% increase compared to end June 2014.

Deposit mix has improved favorably achieving a higher CASA mix (current and savings account to total deposits) of 45% resulting in 437 bp increase on YoY basis.

The Bank’s domestic liquid asset ratio was 30.8% as of end June 2015 while the off-shore liquid asset ratio was 28.9% standing well above the Central Bank’s required benchmark of 20%.

The Bank managed to maintain better trade-off between liquidity and interest earning assets.

The Bank also continued to sustain CAR by maintaining Tier I at 8.4% and Tier II at 11.9% levels against the Central Bank’s minimum requirements of 5% and 10% respectively.

Further, the Bank has created history once again by being ranked among the top five banks in the Asia – Pacific region (excluding China and Japan) in terms of return on capital by “The Banker” magazine, becoming the first Sri Lankan bank to achieve such a performance ranking.
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