Sri Lanka Treasury bill yields down

(LBO) – Sri Lanka’s 12-month Treasury bill yields were down by 6 basis points from 7 percent to 6.94 percent while the six months bill were rejected, data from the state debt office showed.

The Central Bank offered 20 billion worth of Treasury bills today and the auction was oversubscribed by 4.4 times with bids received amounting to 89 billion rupees.

It was decided to accept 5.8 billion rupees worth of bills.

Bonds losses trim Sri Lanka NTB’s Sept quarter profit

ECONOMYNEXT – Nations Trust Bank (NTB) said group net profit for the September 2015 quarter fell 18 percent to 681 million rupees from a year ago with losses in its bonds portfolio and lower interest margins although its credit card business did well.

The group’s interest income fell seven percent to 4.1 billion rupees while interest expenses fell nine percent to 1.9 billion rupees resulting in net interest income falling six percent to 2.2 billion rupees.

Net fees and commission income fell 18 percent to 831 million rupees in the quarter from the year before, interim accounts filed with the stock exchange showed.

Earnings per share for the September quarter fell 18 percent to 2.95 rupees.

EPS for the nine months ending 30 September 2015 fell two percent to 8.41 rupees from the previous year with net profit at 1.9 billion rupees.

Loans grew 14 percent to 113 billion rupees as at 30 September 2015 from the beginning of the year while deposits grew seven percent to 119 billion rupees.

NTB said it estimates it liability for the 25 percent Super Gains Tax at 820.5 million rupees for the group.

Performance for the quarter was “negatively impacted by the marked to market losses recorded on the fixed income securities portfolio in contrast to significant gains made in the corresponding period last year,” a bank statement said.

“Net trading income recorded a significant drop owing to marked to market losses recorded on the FIS portfolio as a result of unfavorable movements in the yields of the underlying government securities,” it said.

The loss for the current period amounted to 233 million rupees compared to a gain of 169 million rupees for the corresponding period last year.

“Narrowing NIMs slowed net interest income growth particularly in the current quarter,” the statement said.

“The bank strategically pushed for higher loan growth with incremental new business booked at relatively lower margins.”

NTB said portfolios such as corporate and leasing in particular, “felt the pinch of declining yields and heavy competition.”

Net fees and commission income growth of 17 percent for the period under review primarily driven by credit card fee based income and transactional fees.

“Concerted efforts put into penetrate trade hubs paid off with trade related fee income posting a commendable growth of 16 percent,” NTB said.

Sri Lanka shares fall; budget uncertainty lingers

Reuters: Sri Lankan shares fell for a second session on Wednesday to their lowest in nearly a week despite foreign buying, while speculation and uncertainty over the upcoming budget dented sentiment.

Brokers said investors kept to the sidelines, awaiting policy direction from the annual budget scheduled for Nov. 20.

The main stock index ended down 0.44 percent at 7,019.23, its lowest close since Nov. 5.

"It's a dull day. Investors want to see the policy direction. They are waiting to see the next year horizon. The Nov. 20 budget will be the next catalyst," said Yohan Samarakkody, head of research at SC Securities (Pvt) Ltd.

Foreign investors, who have been net sellers of 3.64 billion rupees worth of equities so far this year, bought a net 125.6 million rupees worth of shares on Wednesday.

The day's turnover was 545.4 million rupees ($3.84 million), about half of this year's daily average of 1.1 billion rupees.

Chevron Lubricants Lanka Plc fell 2.77 percent, dragging the overall index. 

($1 = 141.8500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Amãna Bank bottom-line grows by 171.8% at Q3 end

Reaches profit of LKR 121.2 million against last year’s loss of LKR 168.7 million 

Amãna Bank, Sri Lanka’s premier non-interest based banking institution, continued its upward profitability momentum by recording a Q3 profit of LKR 50.6 million following its Q1 and Q2 profit of LKR 23.1 million and LKR 47.5 million respectively. The Bank’s Operating Profit before Value Added Tax for the nine months ended 30 September 2015 increased to LKR 225.2 million. 

Bolstered by strong growth in revenue and effective cost management the profit of LKR 121.2 million recorded for the first nine months of 2015, demonstrates a significant improvement of LKR 290.0 million or 171.8% when compared with the loss of LKR 168.7 million posted in the corresponding period of 2014. 

 The Bank’s top line recorded impressive growth with Financing Income reaching LKR 2.0 billion while Net Operating Income grew by 31.8% to stand at LKR 1.4 billion. 

 Having started the year with LKR 34.9 billion in Total Assets, the Bank’s asset base grew up to LKR 43.4 billion during the nine months recording an impressive growth of 24.5%. Customer Advances and Customer Deposits showcased noteworthy improvements closing at LKR 30.2 billion and LKR 34.8 billion respectively. The Bank continued to maintain a low Gross Non Performing Advances Ratio of 1.21%, which stands well below the industry average reflecting the Bank’s strong focus on portfolio quality through effective credit risk management policies and procedures. Net Non Performing Advances at the close of Q3 stood at 0.52%. 

Commenting on the Bank’s performance to date, Chief Executive Officer Mohamed Azmeer stated “I am happy to note that the Bank has been successful in achieving four successive quarters of profits, starting from Q4 in 2014. This promising upward trend resulting in higher than anticipated profits is owing to the revenue growth achieved by the Bank demonstrating the unique value proposition of its model and gaining widespread acceptance. It is also supported by the Bank’s continuous focus in cost management and service excellence. The avenues of growth, reflects our focus of being a Retail and SME Bank, in line with the Bank’s 5 year strategic plan.” 

Amãna Bank is the first Licensed Commercial Bank in Sri Lanka to operate in complete harmony with the non-interest based Islamic banking model and is listed on the Diri Savi Board of the Colombo Stock Exchange. Fitch Ratings, in October 2015, affirmed the Bank’s National Long Term Rating of BB(lka) with a Stable Outlook. The Bank was recognized as the Best ‘Up-and-Comer’ Islamic Bank of the World by ‘Global Finance Magazine’ at the 18th Annual World’s Best Banks Award Ceremony 2014 held in Washington DC, USA. Powered by the stability and support of its strategic shareholders including, Bank Islam Malaysia Berhad, AB Bank in Bangladesh and The Islamic Development Bank based in Saudi Arabia, Amãna Bank is making strong inroads within the Sri Lankan banking industry and is focused on capitalizing the growing market potential for its unique banking model across the country. 
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Sri Lanka's Dialog Axiata profits down on forex loss

ECONOMYNEXT - Dialog Axiata, Sri Lanka's largest mobile operator said group profits fell 60 percent to 679 million rupees in the September 2015 quarter from a year earlier on a forex loss, as the island's soft-pegged central bank printed money and depreciated the currency.

The group reported earnings of 10 cents per share for the quarter.

In the nine months to September profits were 56 cents per share on total profits of 4.56 billion rupees marginally down from 4.61 billion rupees a year earlier.

In the September quarter group revenues rose 10.5 percent to 18.8 billion rupees from a year earlier, but cost of sales rose at a slower 4.7 percent, allowing gross profits to rise 18.5 percent to 8.84 billion rupees.

At the core mobile firm also revenues rose to 16.0 billion rupees from 14.7 billion rupees.

Dialog also has wireless fixed access and pay TV units.

But finance costs rose sharply to 1.7 billion rupees from 231 million rupees a year earlier as the rupee fell, expanding the cost of forex denominated loans.

Sri Lanka has a soft-pegged central bank which prints money to finance the budget deficit, or delay policy interest rates putting the rupee under pressure and generating balance of payments crises.

Due to conflicting monetary and exchange rate policies the rupee is a still a classic uni-directional downward sliding crawling peg.

Sri Lanka vehicle sales strong in October; eases from September surge

ECONOMYNEXT - Sri Lanka's new vehicle sales fell to 55,844 units in October 2015 from 64,020 in September, but remained higher than the August level of 51,161, an analysis of vehicle registry data showed, when confused administrative controls led to panic buying.

Sri Lanka's monthly vehicle registrations fell to 41,161 in August from 62,221 when the Central Bank and Treasury announced a series of confused administrative controls, which led to a surge in sales to 64,020, a market response to State interventions known as an 'announcement effect'.

In October 10,288 cars were sold, down from a peak of 14,544 in September but was the second highest monthly sales in history, an analysis of vehicle registry data by J B Securities, a Colombo-based equities brokerage shows.

Sri Lanka is facing a balance of payments crisis with the Central Bank printing money to keep interest rates down and finance a budget deficit, firing excess demand which is spilling over into credit and imports such as cars.

Instead of tightening policy by ending money printing, by allowing credit markets to work, the Central Bank slapped an administrative control on car credit by reducing the loan to value ratio to 70 percent.

It has since the level has again been raised again to 90 percent following a request from the Finance Minister. The 70 percent limit is expected to come into effect from December.

Sri Lanka's customs also raised the valuation of motor cars, to clamp down on suspected under-invoicing, which is will come in to effect from October 18, JB Securities said.

Sri Lanka's monetary policy regressed into greater administrative controls involving credit ceiling and interest rate ceilings during the Rajapaksa regime as money printing fired two balance of payments crises.

Analysts who saw car credit rising earlier than the Central Bank warned that it was a symptom of a bubble, but they say the bubble can spread to other areas such as property and car credit is a symptom of the malady, and not the disease.

Unlike vehicle leases which can be auctioned fairly easily, property bad loans have a far longer and deeper damaging effect on credit systems.

Bureaucratic credit allocation decisions show a dangerous regression into a mix of administrative controls and fiscal dominance that is characteristic a backward monetary policy regime that exists in some third world countries EN's economics columnist Bellwether says.

Administrative controls and fiscal dominance and central bank re-financed rural credit was widespread in the bad old days of the 1980s, when loose monetary authority helped undermine an 'open economy' in the eyes of public and deny its benefits to the poor by depreciating the currency.

Sri Lanka's rupee continues to be under heavy pressure from printed money, despite the easing of car imports and raising 1.5 billion US dollars from a sovereign bond.

In October however three wheeler sales, which is heavily dependent on credit fell to 8,115 units from 12,406 units in September amid the credit limit confusion. Mini truck sales, another credit driven category fell to 1,092 from 1,531.

Sales of Suzuki-Martu Alto, Sri Lanka's best-selling car fell to 5,224 units from 8,024 in September.

JB Securities says the LTV limit or bunching of deliveries was the reason for the September surge. The waiting time for the Alt is now 4-6 months.

Ruffer Pacific Fund buys into Sri Lanka’s Asiri Hospital

ECONONYNEXT – Ruffer Pacific Fund, an open ended UK-registered fund focused on the Asia Pacific region, has bought into Sri Lanka’s Asiri Hospital Holdings PLC.

The fund bought 36.1 million shares amounting to a 3.29 percent stake, according to interim accounts of Asiri Hospital Holdings for the September 2015 quarter filed with the stock exchange.

The Ruffer Pacific Fund has 10 percent allocated to Sri Lankan equities, the third largest allocation after Chinese equities (35 percent) and Japanese equities (12 percent). It also has 1.9 percent invested in John Keells Holdings.

The Ruffer Group has over 17.7 billion pound sterling in assets, of which over 8.9 billion is managed in open-ended Ruffer funds.