Sri Lanka shares edge up, but down 12 pct in March quarter

Reuters: Sri Lankan shares firmed up on Thursday led by large caps on fiscal year-end buying, but closed nearly 12 percent lower in the March quarter as rising interest rates dented investor appetite for risk assets, brokers said.

The benchmark share index ended 0.51 percent higher, or up 30.89 points at 6,071.88. It fell 11.9 percent in the quarter ended Thursday.

"The market is up on year-end buying," said Reshan Kurukulasuriya, Chief Operating Officer at Richard Pieris Securities Pvt Ltd, referring to the end of financial year for many listed firms including banks.

"It was due to window-dressing for the end of the financial year, and we don't expect much activities in April due to the festival holidays."

Yields on treasury bills increased between 47 and 74 basis points at the weekly auction on Wednesday despite the central bank keeping key rates steady at its policy review on Tuesday.

Investors are likely to shift investments to fixed assets if market interest rates continue to rise, brokers said.

Shares in Carson Cumberbatch Plc climbed 7.06 percent, while Commercial Bank of Ceylon Plc gained 1.62 percent and Ceylon Tobacco Company Plc rose 0.71 percent.

Turnover was 690.9 million rupees ($4.76 million), less than this year's daily average of 773.4 million rupees.

Foreign investors sold a net 38.99 million rupees ($268,434) worth of shares on Thursday, extending the year to date net foreign outflow to 1.99 billion rupees worth shares. 

($1 = 145.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka bank selling rate for US dollar breaches 150.50 rupees

ECONOMYNEXT - The selling rate for US dollar telegraphic transfers by banks in Colombo fell to 154.54 rupees on Wednesday, down from 149.54 a day earlier, breaching 150 rupees for retail buyers.

Central Bank data showed that banks were buying TT dollar for 146.52 rupees, a spread of 4 rupees, according to central bank data, indicative of the uncertainty in markets.

Banks typically charge another 1 percent fee to process bank drafts or notes.

In the kerb market the spread is narrower.

Sri Lanka's central bank began to undermine the rupee with a rate cut in April and monetized large volumes of debt to drive up private credit as budgets deteriorated.

In the interbank market spot-next dollars (settlement three days later) was 149.30/40 to the US dollar by mid-day.

Sri Lanka in talks with Japan for 1200MW cleaner coal plant

ECONOMYNEXT - Sri Lanka is in talks with Japan to finance and build a 1,200 MegaWatt coal ireed power plant in Trincomalee in the north east of the island, a media report said.

Sri Lanka's Daily Mirror newspaper quoted Power Minister Ranjith Siyambalapitya as saying that Japan International Co-operation Agency has expressed willingness to finance the project.

CEB it its most recent long term generation report said the Japanese funded plant would be a high efficiency eco-friendly coal plant.

A pre-feasibility had already been completed New Energy and Industrial Technology Development Organization (NEDO) and Electric Power Development Co., Ltd (J-POWER) of Japan.

Sri Lanka built a 900MW coal plant in Norochcholai with Chinese finance. Though the plant has given some problems and is not the cleanest, it has kept the country supplied and also reduced costs.

Minister Siyambalapitiya told parliament this month that work on a 500MW coal plant with India's National Thermal Power Corporation will be accelerated.

The project is delayed and it is expected that other plants would now have to substitute for it.

Sri Lanka's Capital Alliance closes sale of Fentons Ltd to Hayleys

ECONOMYNEXT - Sri Lanka's Capital Alliance (CAL), an investment bank said it was the sell-side advisor to the sale of Fentons Ltd, a family-owned engineering services company to Hayleys Ltd, a diversified listed business group.

The sale, where Fentons shareholders, the Abhyaratne family, sold a 75 percent stake, valued the company at 960 million rupees.

"Our objective at CAL is to build strong partnerships with our clients based on an intimate knowledge of their needs," Deshan Pushparajah – Head of Investment Banking, CAL said in a statement.

"The company was unique in that it had a rich heritage of almost 100 years carefully nurtured with strong family values.

"As the Abhyaratne family wished to remain as stakeholders in the company post the sale, securing this transaction included a stringent screening process to ensure that the new owner’s value system would seamlessly integrate with that of the family."

CAL said the needs of multiple Fentons shareholders had to be met in finding a match.

Sri Lanka 12-month Treasuries yield up 74pb

ECONOMYNEXT - Sri Lanka's 12-month Treasuries yield rose 74 basis points to 10.64 percent at Wednesday's auction a day after the Central Bank held policy rates unchanged, but fears of monetization remain.

The 3-month yield rose 60 basis points to 8.90 percent and the 6-month yield rose 47 basis points to 9.76 percent.

The debt office, which is a unit of the Central Bank sold 1.75 billion rupees in 3-month bills, 978 million rupees in 6-month bills and 4.35 billion rupees in 12-month bills, totally 7.0 billion rupees.

The debt office offered 21 billion rupees of bills for sale, in a week where an estimated 29 billion rupees of bills were maturing.

On Tuesday banks borrowed about 20 billion rupees in overnight printed money from the central bank to make up for liquidity shortages coming from defending a progressively weakening dollar peg.

If money is printed to repay bills, the overnight borrowing will be permanently accommodated (forex intervention fully sterilized) allowing banks to give more credit without first raising deposits to cover the liquidity short.

Sri Lanka's central bank generates balance of payments crisis by repaying Treasury bills with printed money.

Singhe Hospital revenue up by 31%

Singhe Hospital Rathnapura showed an exceptionally speedy growth in popularity and financial viability in Sri Lanka's health sector with a revenue of Rs. 75.7 Million as at the end of December 2015.

The hospital reflected an increase in revenue by 31% in comparison to the performance for the previous year. Singhe Hospital in the four years of operation since its inception has shown favorable growth in all aspects of the hospital's services. Efficient financial management together with excellent marketing strategy and service implementation in all its services have contributed greatly towards this success.

"First and foremost, I wish to thank all our clients for their confidence placed in our health services. Presently Singhe Hospital is growing in popularity at a rapid rate. Due to our success, we were able to open clinics in Homagama and Negombo for the convenience of our clientele" stated Singhe Hospital's chairman A. M. Weerasinghe.

Due to the high standards in health services offered, Singhe Hospital, Rathnapura has a range of 15,000 to 20,000 patients per month using the various services of the hospital. A 24 hour service is available in all areas of health services together with clinic facilities offering services such as CT scan facilities, X-ray, ultra-sound scanning, dental services, modular theatres, ICU, maternity and labour care unit and pharmacy which offer a total care to all its patients. - Singhe Hospitalwww.island.lk

Sri Lanka will recover with fiscal reforms - ADB

Sri Lanka's economic growth is projected to recover in 2016 as private sector investment will pick up once fiscal reforms are committed to. Growth will rise further in 2017 as the global environment improves, the Asian Development Bank (ADB) said yesterday.

ADB's flagship annual economic publication, Asian Development Outlook (ADO) 2016, forecasts gross domestic product (GDP) growth to rise to 5.3% in 2016 before recovering further to 5.8% in 2017.

"Fiscal consolidation is to be put back on track by a revision of the 2016 budget," ADB's Sri Lanka Resident Mission Senior Country Economist Tadateru Hayashi said . "IMF support, once agreed, will protect against expected pressures from external imbalances as it builds international confidence and facilitates fiscal consolidation and tax reform. A national development strategy will facilitate investment, both domestic and foreign,"he said. Inflation is expected to increase moderately under monetary tightening, picking up to 4.5% in 2016, and further to 5.0% in 2017 as growth picks up.

Though domestic demand remains restrained, the depreciation of the rupee will exert upward pressure on import prices. In addition, dissipation of the base effect of several energy price cuts in 2015 will add to the upward movement in inflation in 2016.

Balance of payments will continue to be under pressure with weak exports as a result of the global slowdown and slack workers' remittances from the Middle East affected by low oil prices.

The expected renewal of GSP+ concessions from the European Union in 2016 is a positive factor for exports, with receipts from tourism also growing, following the trend since the end of the conflict.

This would help maintain the current account balance at -2.0% in 2016, and see it improve to -1.8% in 2017 as exports pick up.

www.dailynews.lk

People's Bank Group posts Rs 24.1 bn PBT

People's Bank posted phenomenal financial results by end 2015, posting 13.3% YoY growth in the highest ever Profit Before Tax of Rs 19.5 bn.

Group PBT also experienced 11.5% growth, notching Rs 24.1 Bn in 2015, compared to Rs 21.6 bn in 2014. Profit After Tax for 2015, notched at Rs 12.6 bn.

People's Bank continued its formidable status of having the Second largest deposit base in the country, observing a growth of 13.3% in its total deposit portfolio amounting to Rs 899.2 Bn, of which the local currency savings deposit base saw an incline of 17.1% to a total of Rs 356.7 Bn. Aligned with this, the CASA ratio increased to a notable 47.8%.

The commendable results are further compounded with the Bank's Net Interest Income increasing to Rs 43.7 bn from Rs 30.1 bn in 2014, with a YoY growth of an impressive 45%, while Total Loans also gained significant upward momentum to Rs 829.2 bn, increasing by 21%. The Bank expanded its balance sheet by Rs 150 bn to reach Rs 1.2 Tn with a percentage of 14.6, reiterating its focused strategies in the results-oriented culture it has mooted.

Having always remained cognizant in adhering to a stringent risk management framework, the best practices infused into the Bank's astute management of credit risk is well reflected in the overall improvement observed in asset quality and the gross NPL ratio of 2.4%, positioned well below industry average of 3.2%. ROA is 1.8 % ROE is 27.1 %. affirming the Bank's well managed strategies that form the foundation for a strong, stable and sustainable custodian of public funds. There however, has been a palpable change in the way People's Bank has been doing business from 2015, which Chairman Hemasiri Fernando states is the reason for the impressive financial results the Bank he helms, has reported. 

www.dailynews.lk

Fitch upgrades Hemas Holdings to ‘AA-(lka)’

Fitch Ratings has upgraded Hemas Holdings’ National Long-Term Rating to ‘AA-(lka)’ from ‘A+(lka)’. The Outlook is Stable.

It has also upgraded the National Long-Term Rating on Hemas’s senior unsecured debentures to ‘AA-(lka) from ‘A+ (lka)’.

The upgrade reflects the company’s improved business risk profile, which is aided by its strong presence in the defensive healthcare and fast moving consumer good (FMCG) sectors. It also reflects its increased focus on the high growth leisure sector and its conservative expansion strategy.

The rating also takes in to account the stronger balance sheet after a rights issue in 2015, which provides strong support for Hemas’s growth strategy.

The acquisition of JL Morison (JLM) has significantly strengthened Hemas’s local drug manufacturing capabilities, which is poised to benefit from the expansion of a government programme to purchase drugs from local manufacturers.

Hemas also aims to expand its hospital chain to take advantage of a rapidly aging population, higher income levels and increasing occurrences of non-communicable diseases.

Hemas will have 705 rooms by the end of the financial year to 31 March 2017(FY17) with the opening of two five-star hotels in collaboration with Minor Group under the Anantara brand.
www.dailynews.lk

Sri Lanka shares rise on foreign buying, cbank rate move

Reuters: Sri Lankan shares edged up on Wednesday from a two-week closing low hit in the previous session on buying led by foreign investors and following a central bank decision to keep key policy rates steady.

Foreign investors bought a net 161.7 million rupees ($1.09 million) worth of shares on Wednesday, but have sold 1.95 billion rupees worth shares so far this year.

The central bank kept interest rates on hold Tuesday, preferring to gauge the impact of recent tightening measures amid government efforts to secure a $1.5 billion IMF loan to avert a balance of payments crisis.

Separately, it said Sri Lanka was planning to issue international sovereign bonds, to raise up to $3 billion.

The benchmark share index ended 0.15 percent higher, or 9.14 points firmer, at 6,040.99, gaining from its lowest close since March 16 hit on Tuesday.

"There was a slight shift in sentiment with the central bank announcement. That instilled some level of confidence in the overall picture of the economy," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"But with interest rates on the rise, we don't see much improvement in the short term. The sentiment will improve in the medium-to-long term."

Shares in Hemas Holdings Plc rose 1.99 percent, while Sri Lanka Telecom Plc climbed 1.04 percent and Ceylon Tobacco Company Plc gained 0.35 percent.

Turnover was 769.5 million rupees ($5.19 million), in line with this year's daily average of 774.8 million rupees. 

($1 = 148.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Aitken Spence partners Shandon for N’Eliya cable car project

Shirajiv Sirimane in Nuwara Eliya (shirajivs@gmail.com)

The much awaited and long overdue cable car project in Nuwara Eliya is once again on the move.

Two new investors have come forward t build and operate this project which will be Sri Lanka’s first ever cable car venture fulfilling a much needed void for the travel industry.

The new project would be a joint venture between Aitken Spence and Shandon International of China which has built over 200 such cable car projects in the world. The total investment is expected to be in the excess of US$ 60 million.

Nuwara Eliya Mayor Mahinda Dodampegamage speaking to Daily News Business said that according to the plans, the project will be built in two stages and most of the approvals are now provided. Stage one one will be from the Nuwara Eliya right mountain to the Lake Gregory. “This would be a two kilometer stretch and there will be many recreation facilities including a mini hotel and host of restaurants at the top of the mountain where the cable car starts.

The second stage will be from the Nanu Oya town to the Nuwara Eliya city which will be a four kilometer stretch. “This is something I have been waiting for since it will allow us to fold up the plan to build a rail link from Nanu Oya to the Nuwara Eliya town.”

The construction is expected to commence late this year and is to be completed in less than two years.

He said the recently hosted Nuwara Eliya horse races by the Royal Turf Club has helped to increase both local and foreign tourists to the city. “I am happy that these races were conducted in a very high standard. We must also thank Royal Turf Club for investing over Rs.100 million to refurbish the race course which was in a very dilapidated state.”

He said tha the previous government spent nearly Rs. 100 million to build an altitude training center for Nuwara Eliya to attract world sports teams to train in Nuwara Eliya during the off season (April to August) “However nothing has been done and I want to launch an inquiry as to what happened to this money. I also want to reactivate this project by building a sports hostel and an international athletic track which will bring exchange to the country.” 

www.dailynews.lk

New Board to allow Maldivian companies to list

The Colombo Stock Exchange (CSE) will allow Maldivian non-resident foreign companies to list, buy and sell securities through the proposed, Multi-Currency Board, Colombo Stock Exchange CEO, Rajeeva Bandaranaike said.

He was speaking at the Maldives Stock Exchange (MSE), Capital Market Development Authority of Maldives (CMDA), CSE conducted road show for potential Maldivian Issuers and Investors held in Male. The event marked the first Issuer Forum conducted by CSE on foreign soil.

The MSE CEO, Hassan Manik said listing in the CSE will provide Maldivian listed companies an opportunity to achieve proper values for their shares. He noted that at present, shares of listed Maldivian companies do not have correct values, which is caused by the lack of liquidity in the market.

CSE Chairman Vajira Kulatilaka said that engaging Maldivian companies has long been an objective at CSE and that reaching out to them first, represents the trust and confidence placed in the Maldives and its business sector.

He stated “We have recently implemented a number of investment and policy measures to give the exchange world-class status. The CSE offers a unique opportunity to raise capital in one of the fastest growing economies in Asia, through an exchange that on average performed better than most major global indices in recent years.”

Maldives Economic Development Minister Mohamed Saeed commended Sri Lankan listed companies for effective capital market engagement and called on Maldivian companies to embrace the many opportunities available in the Sri Lankan capital market.

Softlogic Holdings Chairman and Managing Director, Ashok Pathirage said sourcing capital is just one benefit of listing on the CSE and outlined that listing also fosters good corporate governance, paves the wayfor an optimised company structure and helps in growing the organization through attracting quality talent.

The Issuer Forum comes against the backdrop of a strategic initiative by CSE to introduce a Multi-Currency Board to list and trade companies incorporated and operating outside Sri Lanka.

Over 30 representatives from 20 potential Issuers from the Maldives and seven investment banks from Sri Lanka were present at the event.
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Ceylinco Life declares Rs 2.9 bn as bonuses

Policyholders of Ceylinco Life will celebrate more than the Sinhala and Tamil New Year this April, as they are due to receive a mammoth Rs 2.9 billion as bonuses from the life insurance leader.

Benefitting more than 300,000 policyholders, this bonus pay-out comprises of annual bonuses and 'Avurudu Cash' bonuses, the company announced this week.

This year's annual bonus is the highest in Ceylinco Life's history, and is in respect of the surplus generated by the company's Life Fund in FY 2015. Even policyholders who purchased their policies in December 2015 will be eligible to receive a bonus, in line with the company's policy of declaring bonuses from the very first year of issue of a policy.

Annual bonus certificates totalling Rs 2.9 billion in value will reach entitled policyholders in the post in April and May, and some of them will be accompanied by an invitation to the policyholder from Ceylinco Life to increase his or her life cover, or obtain a retirement plan,to be eligible to win a package tour to Singapore or a smartphone. Meanwhile, some 16,000 Ceylinco Life policyholders will receive immediately encashable cheques to the value of Rs 66.2 million in the post in early April, the company disclosed.

These are the 'Avurudu Cash' bonuses unique to Ceylinco Life, with which the company rewards policyholders for their loyalty. These cash bonuses are presented to Life policyholders who have completed their 10th, 15th, 20thand 25thpolicy year as at 31st December 2015. Ceylinco Life is the only insurer in the industry that pays such cash bonuses.

The cash bonuses are computed at Rs 100 for every Rs 1,000 of the sum assured for policyholders who have completed 25 years, while policyholders who have completed 20 years are eligible to receive a cash bonus computed at Rs 75 per Rs 1,000 sum assured, those who have completed 15 years Rs 50 per Rs 1000 sum assured and those who have completed 10 years Rs 25 per Rs 1000 sum assured.

On this basis, a participating policy with a sum assured of Rs. 1 million will be entitled to a cash bonus of Rs 25,000 on completion of 10 years, Rs 50,000 on completion of 15 years, Rs 75,000 on completion of 20 years and Rs 100,000 on completion of 25 years.

With this year's cash bonus payments, the cumulative value of cash bonuses paid by Ceylinco Life will exceed Rs 410 million.
www.dailynews.lk

NSB posts highest Profit of Rs.13 bn

The National Savings Bank (NSB) has recorded a 26.2% rise in profit after tax to reach Rs. 8.7 billion for the year ended December 31, 2015. The Bank reported an interest income of Rs. 78.1 billion whilst interest expenses marginally decreased by 2.8%. As a result the Net Interest Income rose to Rs. 27 billion. NSB’s total deposit base grew by 7.5% to reach Rs. 595.8 billion while ordinary savings recorded an impressive growth of 15.4% reaching Rs. 163.4 billion.

“I am delighted to be associated with the Bank in this momentous year of growth”, Chairman Aswin De Silva said. “The achievement is significant as it is attributed largely to an organic growth representing core business areas. As we forge ahead towards building a financial resilience in Sri Lanka, we are bolstered by trust and confidence placed in us by all our stakeholders”, he said. The Bank’s growth in profitability in 2015 has been attributed to five key factors: growth in co-business signifying a 26 percent increase in net interest income, improvement in asset quality through the reduction of the Bank’s non-performing loans ratio from 7.6 percent in 2014 to 3.5 percent, increased business volume through a clearer focus on under penetrated business areas such as inward foreign currency remittances, enhanced efficiency and productivity through a well managed operating cost structure and wider reach and accessibility.

“We are privileged to have contributed Rs. 11 billion to the Government by way of taxes, fees and dividend during 2015,” the General Manager and CEO S. D. N Perera said. “The strategic and operational action plan will assist continuity of growth and meeting targets” he added. NSB’s loans and advances grew by 22 percent, its retail lending portfolio increased by 16 percent and corporate lending by 29 percent. The total assets of the Bank stood at Rs. 848 billion indicating a growth of 9 percent. NSB’s Tier 1 capital adequacy ratio stood at 17.8 percent, while total capital adequacy for the reviewed period was at 16.3 percent which were well above the minimum regulatory requirements. The Bank added 9 new branches in 2015 increasing its total branch network to 245.

www.dailynews.lk

Dankotuwa Porcelain to enter Indian market

Dankotuwa Porcelain will be expanding operations into the Indian markets, Dankotuwa Chief Executive Officer Wasaba Jayasekera said yesterday.

Speaking at the 33rd anniversary event he said that Dankotuwa Porcelain has a growing demand in India and the foundation has been laid to begin operations and are looking forward in expanding by the end of this year.

Jayasekera said that currently although Dankotuwa holds advantage over its quality, building relationship and the strength of employees it seems to be lagging in the basics of manufacturing.

“Lacking best practices in the local market has resulted in a stagnating position therefore the planting of the tree pallets marks a new beginning in our 33 porcelain lifespan”, he said. “Aggressively looking towards achieving a sustained manufacturing process with extra value added products which enables to increase profitability for all stakeholders involved”, Jayasekera said.

He added that we are looking forward in attaining higher growth markets locally and in new markets we have set foot in.

The CEO said all Dankotuwa showrooms will be transformed into signature showrooms and looks forward in bringing down cutting edge technological equipments to increase the standards of the manufacturing process. He added that leading science and research institutions have partnered with Dankotuwa Porcelain to develop nano-engineered materials which will lead to much higher value added porcelain products.

The company exports to 40 countries in five continents and now looks forward to further draw up franchises with several more companies in New Delhi and various other states of India.

He said that as a whole Dankotuwa Porcelain enters a new beginning with it’s commemoration of the 33rd anniversary by ensuring to attain agility and rebuild on the stagnation by giving due consideration to the stakeholders in the upcoming years.

www.dailynews.lk

Monetary Policy Review – March 2016 - Policy rates unchanged

According to provisional estimates of the Department of Census and Statistics (DCS), the Sri Lankan economy grew by 4.8 per cent, in real terms, in 2015 compared to 4.9 per cent in the previous year. The expansion of the economy in 2015 was mainly supported by services related activities, which grew by 5.3 per cent during 2015. Agriculture and industry related activities also contributed positively to the growth during the year, expanding by 5.5 per cent and 3.0 per cent, respectively. The growth in 2015 was largely driven by an increase in consumption demand, while investment activities witnessed a deceleration. 

Headline inflation (year-on-year) based on the Colombo Consumer Price Index (CCPI, 2006/07=100) increased to 2.7 per cent in February 2016, compared to 0.9 per cent in January 2016, mainly due to the dissipation of the base effect. Annual average headline inflation also edged up to 0.9 per cent in February 2016 from 0.7 per cent in the previous month. In line with these movements, year-on-year headline inflation, based on the National Consumer Price Index (NCPI, 2013=100), also increased to 1.7 per cent in February 2016 from negative 0.7 per cent recorded in the previous month, and was 2.6 per cent on an annual average basis. Meanwhile, the increasing trend witnessed in CCPI based core inflation continued into February 2016 as well, with core inflation registering 5.7 per cent, on a year-on-year basis, in comparison to 4.6 per cent in the previous month. Going forward, with the policy measures already adopted by the Central Bank, inflation is expected to remain in low- to mid-single digit levels during the remainder of the year. 

On the external front, the deficit in the trade account narrowed by 9.1 per cent, year-on year, in January 2016 as the decline in expenditure on imports has been greater than the decline in earnings from exports. Earnings from tourism are estimated to have increased by 19.4 per cent in February 2016, while workers’ remittances, which declined by 0.5 per cent during 2015, recorded an increase of 8.0 per cent during January - February 2016. Gross official reserves, which stood at US dollars 7.3 billion at end 2015, are estimated to have decreased to US dollars 6.6 billion by end February 2016, mainly due to debt service payments and the supply of foreign exchange to the domestic foreign exchange market largely to cover the demand arising from foreign investors who moved their funds away from the government securities market. Meanwhile, the Sri Lanka rupee remained broadly unchanged against the US dollar thus far during 2016. 

In the monetary sector, market interest rates have risen, reflecting the tightening monetary conditions and the transmission of policy actions of the Central Bank. The year-on-year growth in broad money (M2b), which responds to monetary policy actions with a time lag, remained high at 19.1 per cent in January 2016 in comparison to 17.8 per cent recorded at end 2015. Private sector credit growth was 25.7 per cent in January 2016 compared to 25.1 per cent in December 2015 and 27.0 per cent in November 2015. In absolute terms, private sector credit grew by Rs. 43.6 billion during January 2016. Going forward, the growth of monetary aggregates is expected to decelerate gradually over the remainder of the year, reflecting the impact of the upward movement in market interest rates, while the envisaged fiscal consolidation path is expected to support the moderation of monetary expansion. 

Considering the above, the Monetary Board, at its meeting held on 29 March 2016, was of the view that the current monetary policy stance is appropriate and decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.50 per cent and 8.00 per cent, respectively.

Sri Lanka shares hit 2-wk closing low ahead of cbank rate review

Reuters: Sri Lankan shares closed at a two-week low in thin trade on Tuesday, led by blue chip shares, as concerns over economic growth and rising interest rates weighed on sentiment ahead of a decision on interest rates by the central bank.

The Central Bank of Sri Lanka is expected to raise key interest rates by at least 25 basis points late on Tuesday, a Thomson Reuters poll showed, as it seeks to reduce downward pressure on the fragile local currency.

The benchmark share index ended 0.5 percent, or 30.20 points, weaker at 6,031.85, its lowest close since March 16.

"There are no positive catalysts to push the market up. The index will come down further with foreign investors exiting intermittently and the expectation of further rate hike," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

Rising debt, ratings downgrade and outlook revisions by rating agencies, slowing economic growth, a widening fiscal deficit, looming balance of payments crisis, and changes in budget proposals have dented investor sentiment, analysts said.

Rising yields on treasury bills following an unexpected rate hike by the central bank in mid-February have spurred investor appetite for fixed interest rate-bearing assets, dealers said.

Yields on t-bills are hovering near 29-month highs after jumping between 116 and 195 basis points since the central bank raised key policy rates by 50 basis points from a record low on Feb. 19.

Shares in conglomerate John Keells Holdings Plc fell 1.7 percent, while Distilleries Company of Sri Lanka Plc fell 2 percent.

Turnover was 273.6 million rupees ($1.85 million), its lowest since Feb. 11 and around a third of this year's daily average of 774.9 million rupees.

Foreign investors bought a net 52.8 million rupees worth of shares on Tuesday, but they have been net sellers of 2.06 billion rupees worth shares so far this year. 

($1 = 147.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka shares fall ahead of policy meeting

Reuters: Sri Lankan shares fell on Monday from a more than three-week closing high hit in the previous session ahead of a central bank policy meeting, while concerns over economic growth and rising interest rates also dented sentiment.

The Central Bank of Sri Lanka is expected to raise its key interest rates by at least by 25 basis points on Tuesday, a Thomson Reuters poll showed, as it seeks to reduce downward pressure on the fragile local currency.

The benchmark share index ended 0.5 percent, or 30.40 points, weaker at 6,062.05, after posting its highest close since March 1 on Thursday. Sri Lankan markets were closed on Friday for a local holiday.

Foreign investors sold a net 58.3 million rupees ($396,060) worth of shares on Monday, extending their net selling so far this year to 2.12 billion rupees.

"Investors are very cautious and are waiting for the outcome of the policy meeting," said Reshan Kurukulasuriya, chief operating officer at Richard Pieris Securities Pvt Ltd.

Sri Lanka's economy is expected to expand 5.3 percent in 2016, government data showed last week, but analysts say tight monetary and fiscal policies may curb growth.

Rising yields on treasury bills following an unexpected interest rate hike by the central bank in mid-February, have spurred investor appetite for fixed interest rate-bearing assets, dealers said.

Yields on t-bills are hovering near 29-month highs after jumping between 116 and 195 basis points since the central bank raised key policy rates by 50 basis points from a record low on Feb. 19.

Lion Brewery Ceylon Plc shares fell 8.20 percent on Monday, while conglomerate John Keells Holdings Plc dropped 0.99 percent.

Turnover was 397.4 million rupees, a little more than half of this year's daily average of 784 million rupees.

Lackadaisical trend in Sri Lanka vehicle registrations in Feb: JB Sec.

(LBO) – The lackadaisical trend from January has continued into February with the 70 percent LTV rule, significant increases in tariffs, continuing weakness in the rupee, surprising strength in the Yen and rising interest rates have retarded volumes, JB Securities said in a research note.

Vehicle registrations February 2016

Motor car registrations recorded 2,897 units in Feb marginally up from 2,888 units a month ago and significantly down from 4,138 units 12 months ago. As a point of reference the number was 10,084 units in Nov and 14,544 units in Sep last year.

Brand new segment registrations recorded 1,066 units in Feb marginally up from 1,023 units the previous month and also down from 1,920 units recorded 12 months ago.

Maruti recorded 523 units in Feb recovering from its 20-month low of 255 units recorded the previous month but still lower than 1,496 units recorded 12 months ago. As a point of reference Maruti registrations recorded 5,631 units in Nov and 8,029 units in Sep last year.

Micro registrations also crashed to 182 units in Feb from 415 units the previous month but up from 142 units 12 months ago. Tata recorded 109 units of which 62 units were Nano Twist and 33 units were Indica.

Preowned car segment registrations recorded 1,831 units in Feb marginally down from 1,863 units a month ago and significantly down from 2,218 units 12 month ago.

Toyota recorded 689 units in Feb marginally down from 709 units in Jan and Suzuki recorded 666 units in the month marginally down from 673 units in Jan. Financing share was 64.3% recovering from 62.3% the previous month but still down from the high 60s in the previous 9 months.

Premium brands recorded 37 units in Feb (lowest in the past 24 months), lower than 37 units the previous months and 104 units 12 months ago.

Mercedes recorded 8 new units (C-class 2, E-class 2 and S-class 3) and 14 pre-owned units (C-class 5 units, E-class 3 units). BMW recorded 1 new unit (3- series 1) and 7 preowned units.

Electric cars recorded 155 units in Feb down from 173 units the previous months but up from a mere 13 units 12 months ago.

Nissan Leaf accounted for 147 of the units registered in Feb down from 165 units in Jan. Records show 2 Tesla Model S’ – this puts the total on the road at around 13 – not bad for Sri Lanka.

SUV registrations recorded 571 units in Feb marginally up from 563 units the previous month and down from 818 units 12 months ago.

Nissan maintained its leadership recording 183 units (Hybrid X trail 176), Mitsubishi recorded 96 units (Outlander 71, Montero 25), Toyota recorded 110 units (Prado 97, Harrier 10), Honda 81 units (Vezel 78).

This category has not witnessed the same level of deceleration that many other categories have witnessed primarily due to the strong performance of two hybrid models – Nissan X Trail Hybrid and Mitsubishi Outlander Hybrid.

What is also surprising is that 97 units of Prado were registered although they may have been imported a few months ago – these vehicles currently retail around LKR 15-20 million each, 40% have been bought for cash and the balance on finance.

Hybrid registrations recorded 2,004 units in Feb marginally up from 1,934 units the previous month and 2,727 units 12 months ago.

Suzuki Wagon R recorded 623 units marginally down from 630 units but significantly down from the record set in Sep of 1,638 units.

Toyota cars recorded 647 units marginally up from 624 units recorded the previous month but significantly down from the record set in Sep of 1,859 units – Aqua accounted for 205 units, Axio for 326 units followed by Prius accounting for 96 units.

Van registrations recorded 364 units in Feb marginally up from 360 units the previous month and 51% of the units recorded 12 months ago.

Toyota recorded 141 units in Jan significantly down from the record set in Sep of 585 units and Suzuki recorded 71 units also significantly down from the record set in Sep of 585 units. Financing share was 75%.

3-wheeler registrations recorded 2,909 units in Feb down from 3,468 units in Jan and 7,794 units 12-month ago. For brevity I will repeat what I said last month – this is the lowest monthly registration recorded in the past 5.5 years – similar low points were 3,577 units in May 2012 after the precipitous depreciation of the currency and 3,731 units in Nov 2009.

The combination of higher tariffs that increased the price of a 3-wheeler to LKR 600,000 and 70% LTV rule has increased the initial down payment to LKR 180,000 – a sum too large for most buyers.

Many 3-wheeler buyers view it as both a consumption and production asset, i.e. partly for their own use and partly to be used for hires to generate sufficient income to pay the monthly lease. Financing share recorded 84.7%.

2-wheeler registrations recorded 21,487 units in Feb marginally up from 21,397 units the previous month but down from 12-months ago of 25,155 units.

Hero that had performed exceptionally well towards the latter end of 2015 commanding a market share of over 30% has declined to 16.5%, Bajaj had regained its share to 34.1% in the month recovering from the mid-20s during the latter part of the year. Financing share increased to 60.2% one of the highest levels in the last 24 months.

Pickup truck registrations recorded 194 units in Feb down from 269 units the previous month and 518 units set 12 months ago.

Tata recorded a commanding market share of 64.9%, Mitsubishi saw a dramatic slump in demand for its L200 pickup. Financing share rebounded to 79.9% in line with its normal level.

Mini truck (payload < 1 MT) registrations were 747 units in Feb marginally down from 811 units in Jan and significantly down from 1,128 units recorded 12 months ago.

Tata the market leader recorded a share of 69.3% on lower volumes whilst Mahindra commanded a share of 26.6% a decline over 2015. Financing share remained a high 90.8%.

Lite truck (payload < 2 MT) registrations were 506 units in Feb marginally up from 504 units the previous month but up from 410 units recorded 12 months ago.

Mahindra is the market leader with a 65.8% share. Financing share remained at a high 90.7%.

Medium trucks (payload < 5 MT) registrations were 160 units in Feb similar to 159 units recorded the previous month but down from 222 units recorded 12 months ago.

Isuzu is the market leader with 38.8% followed by Mitsubishi with 18.8% and Tata with 17.5%. Financing share was a high 80.6%.

Heavy trucks (payload > 5 MT) registrations were 115 units in Feb up from 106 units the previous month but down from 116 units 12 months ago.

Tata was the market leader with a 49.5% share followed by Lanka Ashok Leyland with 37.6%. Financing share was 89.6%.

Buses recorded 189 units in Jan similar to 189 units the previous month and marginally down from 201 units recorded 12 months ago.

Ashok Leyland is the market leader with a share of 41.3%. Financing share was 85.7%.

Lanka Walltiles to expand into other businesses

By Duruthu Edirimuni Chandrasekera

The Lanka Walltiles PLC (LWL), manufacturer and exporter of wall tiles has plans for expand into other businesses, officials said. ”We want to add another production line and expand into related businesses,” an official told the Business Times.

LWL group bottomline more than doubled to 119 per cent year on year (YoY) in Q3 FY 16 to Rs. 829 million, but this was owing to the Rs. 100 million as the deferred taxation in expectation of corporate tax reduction in the budget. The official said that since this didn’t happen, the Rs. 100 million will be reversed in the 4Q. The tile and associated item segment which was up by 107 per cent YoY pushed this growth.

The aluminum and packaging products played a prominent role in boosting the profit before tax in the 3Q growing 66 per cent and 118 per cent to Rs. 102 million and Rs. 69 million respectively. According to the official, there’s a buoyant demand for construction that would assist LWL’s bottomlines to continue to be stable. He also said that they want to sustain the exports and there’s a strategy to expand LWL’s exports to Queensland, Australia as there’s a boom in the housing market there.

www.sundaytimes.lk

Prime Minister orders an investigation into CSE power failure

(LBO) – Sri Lanka’s Prime Minister has ordered an investigation into the sudden power failure reported recently at the Colombo Stock Exchange.

“Every stock exchange should have back-up power to operate. Today foreign investors asked us how they invest in a market where there is no power to operate,” Premier Ranil Wickremesinghe said.

“That is our biggest issue now. They are more concerned on that; not on our proposed taxes (Capital Gains Tax). This tax is even there in London.”

A power outage resulted in a temporary trading halt of 17 minutes at CSE on 16 March 2016 and the trading was halted at 9.58 am in the morning and restored at 10.15 am.

However, the CSE said trading and all other operations at the CSE have continued for the rest of the day with no interruption.

Sri Lanka sells US$375mn in short term dollar paper, bonds

ECONOMYNEXT - Sri Lanka has sold 375 million dollars in 3 and 6 month paper and 1 and 2 year dollar denominated bonds at an auction Wednesday, where yields edged up, data from the state debt office showed.

The debt office sold 10.3 million dollars 3 month bills at 472.12 basis points fixed, down from 475 basis points on March 09.

The debt office also sold 38.88 million dollars in six month paper, at a floating rate of 407.14 basis points above 6-month London Interbank Offered rate. On March 09, five month paper was sold at 381.22 basis points above Libor.

In one year bonds, 203.46 million dollars were old at 439.2 basis points above 60month Libor, up from up from 430.89 basis points above Libor on March 09.

In 2-year bonds 71 million dollars' worth were sold at 448.73 basis points, higher than 444.58 basis points above Libor paid for 2 years and 1 month paper on March 09.

About 0.04 million dollars of 1 year bonds were also sold at a fixed rate of 525 basis points.

The Sri Lanka Development Bonds are sold to resident and non-resident investors who can hold dollar assets, under Sri Lanka law.

Watawala Plantations, Duxton Asset Management invest in Sri Lankan dairy farm

ECONOMYNEXT – Singapore-based fund manager Duxton Asset Management has tied up with Watawala Plantations to set up a Sri Lankan dairy farm with an investment of 11.5 million US dollars, aiming to improve local yields and replace imported milk products.

Vish Govindasamy, Group Managing Director of Sunshine Holdings, the parent firm of Watawala, said he expects a return on investment of about 17 percent, with the farm using imported cows and expertise on an estate where tea cultivation is no longer profitable.

The two companies will invest total equity of over six million US dollars in almost equal proportions and raise the remaining funds as debt.

The farm, on Lonach Estate, Ginigathhena, will import about 1,000 milking cows and produce about 30,000 litres of milk when running by the end of year, up from 1,500 litres of milk a day now.

“We have to build the farm and import the cows and get them acclimatized to the climate,” he told a news conference.

“Lonach Estate has a lot of workers and because tea is not doing well now, we unable to give them work,” he said. “With the farm coming, we can grow different types of feed stock which means more people will be employed.”

Desmond Sheehy, co-founder and Chief Investment Officer of Duxton Asset Management, said the fund mainly invests in the agricultural field, being the largest investor in dairy in Australia and having also invested in tea in India.

A subsidiary, Watawala Dairy Ltd., will run the dairy farm and will use imported, very efficient cows, and farming expertise to improve local farm practices, he said.

Duxton manages assets of 690 million dollars of which 460 million dollars in agricultural investments

“The dairy operation is expected to further diversity and strengthen the revenue streams of Watawala Plantations, which has benefitted from strategic diversification into palm oil,” a statement said.

“Once in full operation Watawala Dairy will expand its herd to 1,000 dairy cows and is forecast to generate over a billion rupees in revenue from the fourth year of operation” with significant potential for further expansion, it said.

Sri Lanka shares firm up on foreign buying, hit more than 3-wk closing high

Reuters: Sri Lankan shares rose in thin trade to hit a more than three-week closing high on Thursday as foreign investors net bought stocks for the first time in nine sessions, but growth woes and rising bond yields capped gains ahead of a long weekend.

Foreign investors bought a net 33.1 million rupees worth of shares on Thursday, but they have net sold 2.06 billion rupees worth shares so far this year.

Sri Lanka's economy is expected to expand 5.3 percent in 2016, government data showed last week, but analysts say tight monetary and fiscal policies may curb growth.

Rising yields on treasury bills, which have been on the up following an unexpected interest rate hike by the central bank in mid-February, have spurred investor appetite for fixed interest-rate bearing assets, dealers said.

Yields on t-bills, which are hovering at more than two-year highs, jumped by 62-90 basis points at a weekly auction on Monday.

The benchmark share index, ended 0.31 percent, or 18.95 points firmer, at 6,092.45, the highest since March 1.

"We expect this volatility to continue and market to trade between 5,800 and 6,000. Many investors are on the sidelines waiting to see the direction of the economy," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Shares in conglomerate John Keells Holdings Plc rose 1.33 percent, while Ceylon Tobacco Company Plc rose 0.52 percent.

Turnover stood at 488.2 million rupees ($3.34 million) on Thursday, less than this year's daily average of 796.9 million rupees.

The Sri Lankan stock market will be closed on Friday for a public holiday.

($1 = 146.3000 Sri Lankan rupees) 

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Biju Dwarakanath)

Havelock City launches sales of phase 3 apartments

Havelock City, the premier residential development in Sri Lanka ceremoniously launched the sales of its phase 3 apartment towers. A grand scale cocktail was held at its own clubhouse with over 300 guest attendance.

Phase 3 comprise two residential towers Stratford and Melford with 304 luxurious apartments. These beautifully designed, spacious residencies with garden and sea views are a combination of two, three and four bedroom units and a select number of plush penthouses.

All apartments are released to the market at a special launch price on a limited time offer, continuing with attractive progress payment schemes and loan facilities from reputed banks for potential buyers and investors.

Havelock City, the largest integrated mixed-use development project undertaken in Sri Lanka is built on 18 acres of prime land in the heart of Colombo and comprises residential apartments as well as a commercial complex consisting of a shopping mall and office towers.

Havelock City is a celebration of modern urban living, with 18 astonishing acres of soaring architecture, state-of-the-art facilities and landscaped gardens, making Havelock City a truly private city within the city. Havelock City is being developed in phases. Phase 1 and 2 consisting of 445 apartments in four towers were completed and residents have already taken occupation and are enjoying the lifestyle Havelock City has to offer. The Havelock City Clubhouse, which could possibly be the largest of its kind in any development, is a marvel, with swimming pools, jacuzzi, banquet halls, gymnasium, restaurant, squash courts, audio visual centres, mini supermarket, launderette and many other facilities and amenities. Havelock City also boasts of Sri Lanka’s largest elevated roof garden; an expansive seven acre eco habitat with lush tropical foliage. Residents of Havelock City enjoy a privilege that is unmatched anywhere in Colombo with this uniquely landscaped garden replete with jogging tracks, bamboo pools and exercise corners.

Havelock City is the brainchild of Overseas Realty, a BOI approved flagship status quoted company, who is also the owner, developer and manager of the iconic World Trade Centre, Colombo. The Chairman of Overseas Realty and Havelock City is visionary property tycoon S.P. Tao of Singapore. Havelock City is a joint venture between Overseas Realty and Bank of Ceylon.www.ft.lk

SriLankan Airlines unable to repay $1 b debt: PM tells P’ment

AFP: Sri Lanka’s loss-making national carrier will not be able to repay its debt of nearly $1 billion, Prime Minister Ranil Wickremesinghe told parliament Wednesday.

With its own finances in a rocky state, the government will decide within six weeks whether it can afford to take over SriLankan Airlines’ debt repayments, the premier said.

State enterprise development minister Kabir Hashim, who oversees the carrier, earlier this month put its debt at $933 million but on Wednesday it emerged the figure could be higher.

“The minister says the actual debt is likely to be much more than what we initially feared,” Wickremesinghe said during a parliamentary debate on the economy. 

“SriLankan Airlines will not be able to repay this debt. We will have to take a decision on this.”

A mounting debt crisis of its own has forced the government to request a bailout of its own from the International Monetary Fund.

The beleaguered national carrier has drawn controversy in recent years after an independent investigator last year found evidence of serious corruption in a $2.3 billion deal to buy Airbus aircraft.

Wickremesinghe said Wednesday he was still reviewing the deal, reached under the administration of former President Mahinda Rajapakse despite huge losses at the airline.

The deal is also being probed by the police Financial Crime Investigation Division.

Last month ratings agency Fitch cut Sri Lanka’s credit rating by one notch to B+ with a negative outlook over its debt crisis.

Negotiations are also underway for a $1 billion currency swap with a Chinese state-owned bank to shore up the country’s dwindling foreign reserves.
www.ft.lk

Govt. borrows $ 375 m via Development Bonds

The issue of Sri Lanka Development Bonds (SLDBs) for US$ 150 million has been oversubscribed with total bids received amounting to US$ 380.73 million, the Central Bank said on Wednesday.

Govt. borrows $ 375 m...
The Central Bank on behalf of the government offered to issue of US$ 150 million 3 months, 6 months, 1 year and 2 years tenor to eligible investors for subscription at a rate of either US Dollar 6 month LIBOR plus a margin (floating rate) or at a fixed rate to be determined through competitive bidding.

The issue was open for subscription from 16 to 23 March.

The Central Bank has accepted $ 10.33 million in 3 months bonds after receiving bids worth $ 10.33 million at a fixed rate of weighted average margin over six month LIBOR of 472.12 basis points and $ 38.88 million at a floating rate of weighted average margin over six month LIBOR of 407.14 basis points.

The 6 months bonds received bids amounting to $ 54.0 million and accepted $ 52.0 million at a floating rate of 414.23 basis points.

The Bank accepted all bids of $ 203.46 million received in 1 year bonds at a floating rate of 439.20 basis points and $ 40,000 at a fixed rate of LIBOR plus 525.00 basis points.

The 2 year bonds received bids amounting to $ 72.02 million and accepted $ 71.0 million at a floating rate of 448.73 basis points.

The bonds have a settlement date of 28 March 2016.
www.ft.lk

Govt. borrowed 25% more last year than in 2014: Ravi K

Reuters : Sri Lanka borrowed over 25%more last year than in 2014, Finance Minister Ravi Karunanayake said on Wednesday, blaming the high cost of refinancing loans he said were raised by the previous government without parliamentary approval.

Karunanayake told parliament that total government borrowing rose 25.6% in 2015 to Rs. 1.74 trillion.

That included a 23% rise in domestic borrowing, to Rs. 1.19 trillion ($8.15 billion), and a 32% jump in foreign borrowing, to Rs. 556.4 billion.

“We had to obtain more loans to repay the loans taken by the previous government without informing the parliament and the cabinet,” Karunanayake said. “Of those loans, 89.9% was to repay the expenses of the last government and rest is for the capital expenditure.”

Prime Minister Ranil Wickremesinghe said on 8 March that former president Mahinda Rajapaksa’s government had not included Rs. 1.04 trillion rupees in borrowing by state enterprises in the national debt, which was estimated at Rs. 8.48 trillion at the end of 2015.

Wickremesinghe said the government owed Rs. 9.5 trillion ($65.6 billion). He also announced plans to raise value-added tax and reintroduce capital gains tax to help tackle Sri Lanka’s high debts ahead of talks on a $1.5-billion loan it is seeking from the International Monetary Fund.

A downgrade of Sri Lanka’s credit rating by Fitch to B+ with a negative outlook and an outlook change to negative by Standard & Poor’s this month have intensified scrutiny of the island nation’s public finances.

The $82.2 billion economy faces a balance-of-payments crisis after the Central Bank burned through one-third of its foreign exchange reserves in the 15 months to January defending the rupee currency.

Last year’s budget deficit is meanwhile expected to have increased to 7.2% of gross domestic product, compared with a target of 4.4 %.

On Wednesday, Wickremesinghe said the government is still undecided on how to repay an estimated Rs. 365 billion debt run up by state-run SriLankan Airlines.
Govt. borrows $ 375 m via Development Bonds

The issue of Sri Lanka Development Bonds (SLDBs) for US$ 150 million has been oversubscribed with total bids received amounting to US$ 380.73 million, the Central Bank said on Wednesday.

www.ft.lk

Singer increases free float through share sale to institutional investors

Singer (Sri Lanka) PLC, the country’s leading consumer durable retailer, yesterday announced an increase in its free float following a sale of shares to international and local institutional funds.

In line with parent company, Singer (Sri Lanka) BV divesting a 6.43% stake to institutional investors, Singer Sri Lanka has increased the liquidity of traded shares, broadened its shareholder base and thereby increased its capital market presence.

Singer Sri Lanka saw 8.11 million of its shares changing hands via trades for Rs. 927.5 million or 73% of the day’s turnover. Of the quantity, 7.79 million shares were done via four crossings at Rs. 114.30 each. The share price of Singer Sri Lanka decreased by Rs 5.30 (4.41%) closing at Rs 115.00 whilst foreign holdings decreased by 2.115 million shares.

Around three foreign funds had picked up a collective 5.68% stake whilst the solitary local institutional investor had bought 1.6% stake.

Singer Sri Lanka Group CEO Asoka Peiris told the Daily FT that fresh foreign interests were following successful showcasing of the Company, market and country prospects during one to one investor meetings in London Invest Sri Lanka Forum organised by the CSE, Hong Kong, Thailand and Sri Lanka Summit in Singapore recently.

Following the transaction Singer Sri Lanka BV will continue to hold 99,762,850 shares representing an 79.7% interest in the capital of Singer (Sri Lanka) PLC. The parent company has also assured the Sri Lanka Board of its continued support and commitment towards the ongoing success of the Company.

Singer said through this transaction Singer Sri Lanka has successfully expanded its shareholder base and paved the way to boost its share capital ensuring the continuation of its dynamic growth. 

www.ft.lk

Sri Lanka shares retreat amid foreign fund outflows

Reuters: Sri Lankan shares ended weaker on Wednesday, slipping from a near three-week high hit in the previous session, as foreign investors exited risk assets amid concerns over the country's economic growth and rising bond yields.

Sri Lanka's economy is expected to grow 5.3 percent in 2016, but analysts say tight monetary and fiscal policies may curb growth. The $82.2-billion economy expanded at a sluggish 2.5 percent in the December quarter.

The benchmark share index, which gained 0.3 percent in early trade, ended down 0.25 percent, or 15.07 points, at 6,073.50.

The index closed at its highest since March 1 on Monday. Markets were closed on Tuesday for a public holiday.

Foreign investors sold a net 305.5 million rupees ($2.10 million) worth of shares on Wednesday, extending the net foreign outflow so far this year to 2.09 billion rupees worth shares.

Investors preferred fixed interest-rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at more than two-year highs, and on an unexpected interest rate hike by the central bank in mid-February, dealers said.

Yields on t-bills jumped by 62-90 basis points at a weekly auction on Monday to hit 29-month highs.

"The slow downward trend is continuing. A block deal pushed up the turnover," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Turnover stood at 1.27 billion rupees on Wednesday, well above this year's daily average of 796.9 million rupees.

Shares in Carson Cumberbatch Plc fell 10.87 percent, while Commercial Leasing and Finance Plc fell 7.69 percent. Distilleries Company of Sri Lanka Plc climbed 1.61 percent. 

($1 = 145.8000 Sri Lankan rupees) 

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Biju Dwarakanath)

Sri Lanka shares end at near 3-wk high; foreign investors continue exit

Reuters: Sri Lankan shares closed at a near three-week high on Monday in dull trade as cautious investors selectively bought risk assets, while foreign investors exited amid a rise in yields of government securities.

Uncertainty over a capital gains tax and economic growth, and a higher budget deficit also hurt market sentiment, analysts said.

Foreign investors sold 137.5 million rupees ($946,644) worth of shares on Monday, extending the net foreign outflow so far this year to 1.79 billion rupees worth of shares.

The benchmark share index ended 0.51 percent, or 30.78 points higher, at 6,088.57, its highest close since March 1.

"Nothing much is happening. Overall, everything is very dull with holidays in-between, and investors are worried over the uncertainties," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

Markets will be closed on Tuesday and Friday for local holidays.

Investors preferred fixed interest-rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at more than two-year highs, and on the central bank's unexpected interest rate hike in mid-February, dealers said.

Yields on t-bills jumped by 62-90 basis points at a weekly auction on Monday to 29-month highs.

Sri Lanka will raise its value-added tax and reintroduce capital gains tax to break out of a debt trap, ahead of talks on a $1.5-billion loan it is seeking from the International Monetary Fund.

Sri Lanka's economy is expected to grow 5.3 percent in 2016, data from the state statistics office showed, but analysts say tight monetary and fiscal policies may curb growth.

The $82.2-billion economy expanded at a sluggish 2.5 percent in the December quarter, down from an upwardly revised 5.6 percent in the previous quarter.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Turnover stood at 466.5 million rupees, well below this year's daily average of 787.8 million rupees.

Shares in Carson Cumberbatch Plc jumped 15.57 percent while Commercial Bank of Ceylon Plc rose 1.33 percent. Distilleries Company of Sri Lanka Plc climbed 2.57 percent. 

($1 = 145.2500 Sri Lankan rupees) 

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Biju Dwarakanath)

Sri Lanka Singer Finance's debt gets 'BBB(lka)' Fitch rating

ECONOMYNEXT - Fitch Ratings said it has assigned Singer Finance (Lanka) PLC's proposed senior secured redeemable debentures of up to 1.5 billion rupees a final National Long-Term Rating of 'BBB(lka)'.

The final rating is the same as the expected rating assigned on 15 February 2016, a statement said.

Fitch said Singer Finance expects to use the proceeds to fund lending growth, lengthen maturities of its liabilities and reduce structural maturity mismatches.

The full rating report follows:

Fitch Ratings-Colombo-18 March 2016: Fitch Ratings has assigned Singer Finance (Lanka) PLC's (SFL; BBB(lka)/Stable) proposed senior secured redeemable debentures of up to LKR1.5bn a final National Long-Term Rating of 'BBB(lka)'.

A full list of existing ratings is at the end of this rating action commentary.

The assignment of the final rating follows the receipt of documents conforming to information already received, and the final rating is the same as the expected rating assigned on 15 February 2016.

The issue will have two tranches that have bullet principal repayments in the third and fourth years. The debentures carry a fixed-rate coupon paid semi-annually and they will be listed on Colombo Stock Exchange. SFL expects to use the proceeds to fund lending growth, lengthen maturities of its liabilities and reduce structural maturity mismatches.

KEY RATING DRIVERS

NATIONAL RATINGS AND SENIOR DEBT

The issue has been rated at the same level as SFL's National Long-Term Rating. The debenture is secured by a primary mortgage over receivables from identified lease agreements. Fitch has not provided any rating uplift for the collateralisation as the recovery prospects are assessed as average and comparable to those of unsecured notes in a developing legal system.

SFL is rated two notches below its parent, retailing company Singer (Sri Lanka) PLC (Singer; A-(lka)/Stable). This reflects Singer's majority ownership in SFL, the common Singer brand and Singer's influence on SFL's strategic direction through representation on the finance company's board. The two-notch differential also reflects SFL's limited role in the group as SFL provides financing for only a low proportion of Singer's sales.

SFL's rating also reflects its standalone credit profile, its higher capitalisation levels compared with its peers amid modest loan growth, and its improved asset-quality metrics.

RATING SENSITIVITIES

NATIONAL RATINGS AND SENIOR DEBT

Any changes to SFL's National Long-Term Rating would impact the issue's National Long-Term Rating.

SFL's rating may be upgraded if there is a significant increase in its strategic importance to Singer. A rating upgrade could also result if SFL is able to continue to maintain its capitalisation and asset-quality metrics at levels comparable to higher-rated peers while achieving a stronger franchise relative to its higher-rated peers.

A sustained deterioration in SFL's standalone credit profile, capitalisation and asset quality relative to similarly rated peers would result in a downgrade of SFL's standalone rating. A weakening in SFL's intrinsic strength, however, would not necessarily trigger a downgrade of its National Long-Term Rating, unless Singer's National Long-Term Rating or its propensity to support SFL were to weaken simultaneously.

Battered brokers bemoan Capital Gains Tax

By Charumini de Silva

Battered stockbrokers are urging the Government to consider reintroducing the Share Transaction Levy (STL) as a less damaging alternative to the Capital Gains Tax (CGT), which they warn will further hurt the Colombo Bourse.

“At this juncture where markets’ daily trading volumes are at record-low levels, bringing in a Capital Gains Tax would be counterproductive,” Colombo Stock Brokers Association President Ravi Abyesuriya told the Daily FT.

As an alternative, the CSBA Chief suggested that it would be more appropriate for the Government to reinstate the STL which had contributed Rs. 38 billion to Treasury coffers as revenue over the last decade. Last year the amount raised was Rs. 1.5 billion.

In the 2016 Budget, in a surprise move, the Government decided to remove the 0.3% STL charged to both buyers and sellers with effect from 1 January.

Originally capital market stakeholders welcomed the removal. However, following the Government’s recent announcement of the return of the CGT following its removal in 1987, the CSBA is urging a reintroduction of the STL.

While acknowledging that the present Government needed to boost revenue, Abeysuriya said that re-implementing the CGT was not the best course of action.

He said that the market had seen a “huge plunge” following the announcement of the reintroduction of the CGT. “From an investor’s point of view, the Capital Gains Tax is a declaration file and it scares away investors,” he added.

Year-to-date, the market has dipped by 12%, with over Rs. 400 billion in value wiped off while net foreign outflow has been Rs. 1.3 billion.

Highlighting the practical difficulties in implementing the CGT, Abeysuriya asserted that while the Government taxed gains it would also have to accept the capital losses as the calculation and mechanisms of it were extremely complicated and cumbersome.

“Sri Lanka does not have sophisticated systems like the US or the UK to undertake this whole calculation. With all that effort we will ultimately not get what we got through STL. The Government would have to forego what it was generating, which got credited to its account automatically on a daily basis,” he stressed.

In addition, Abeysuriya noted that the negative outlook posted by international rating agencies over Sri Lanka’s macroeconomic fundamentals had also impacted the Colombo Bourse with foreign investments exiting. 

www.ft.lk

Sri Lanka shares fall from two-week high on tax, economic woes

Reuters: Sri Lankan shares fell on Friday after two sessions of gains as uncertainty over a capital gains tax, higher budget deficit and economic growth weighed on investors' sentiment.

The benchmark share index was down 0.17 percent, or 10.38 points, at 6,057.79, edging down from its highest close since March 3 hit on Thursday.

Sri Lanka will raise its value-added tax and reintroduce capital gains tax to break out of a debt trap, ahead of talks on a $1.5-billion loan it is seeking from the International Monetary Fund.

"There isn't much information on capital gains tax, though the government said it will reintroduce it. There is an uncertainty on the capital tax percentage. Investors are waiting to know more," said Prashan Fernando, COO, Acuity Stockbrokers.

Investors preferred fixed-interest-rate-bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank's unexpected interest rate hike in mid February, dealers said.

Sri Lanka's economy is expected to grow 5.3 percent in 2016, data from the state statistics office showed, but analysts say tight monetary and fiscal policies may curb its growth.

The $82.2-billion economy expanded at a sluggish 2.5 percent in the December quarter, down from an upwardly revised 5.6 percent in the previous quarter.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Turnover stood at 919.5 million rupees ($6.3 million), more than this year's daily average of 794.1 million rupees.

Shares in Sri Lanka Telecom Plc fell 2.69 percent. 

($1 = 145.0000 Sri Lankan rupees) 

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Anand Basu)

Nation Lanka Finance Rs. 502 mn rights issue oversubscribed

Nation Lanka Finance's Rights Issue worth Rs. 502 million closed recently and was successfully oversubscribed, with applications exceeding the initial share allocation of 502, 326, 522 ordinary shares.

The Rights Issue was held on the basis of 02:01 at Rs. 1 per share and was extended to existing shareholders.

The successful Rights Issue has provided the company with an infusion of capital, which will ensure its compliance with the required Tier 1 adequacy ratio set by the Central Bank of Sri Lanka.

Additionally the funds generated from the issue will help to improve the company's overall liquidity whilst supporting its continued growth and expansion.

Nation Lanka Finance CEO Jayantha Perera said the oversubscription of this Rights Issue is a strong indicator of the public's faith in strategic and operational capabilities and look forward to building further on this milestone and solidifying Nation Lanka Finance's position as a leader in the local financial services industry.

Nation Lanka Finance has renewed its focus on product development, compliance, good governance and shareholder value-maximisation as part of its long-term commitment to be a responsible corporate citizen and industry leader.
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Sri Lanka shares at two-week high; rupee weaker

Reuters: Sri Lankan shares gained for the second session on Thursday at their highest in two weeks as investors bought beaten-down stocks, but concerns over a higher budget deficit and economic growth dampened investor sentiment, brokers said.

The benchmark share index was up 0.78 percent, or 47.15 points, at 6,068.52 at 0711 GMT, its highest since March 3.

Investors preferred fixed interest rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank's unexpected interest rate hike in mid-February, dealers said.

"Despite the negative outlook, it seems that a part of the recovery is driven by new investors who have entered the market," said Danushka Samarasinghe, research head, Softlogic Stockbrokers.

Sri Lanka's economy is expected to grow 5.3 percent in 2016, data from the state statistics office showed, but analysts say tight monetary and fiscal policies may curb its growth.

The $82.2 billion economy expanded at a sluggish 2.5 percent in the December quarter, down from an upwardly revised 5.6 percent in the previous quarter.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Turnover stood at 1.15 billion rupees ($7.94 million).

The central bank rejected all bids at a weekly T-bill auction on Wednesday for the second week after yields on short tenure bonds hit two-year highs.

The rupee traded weaker, currency dealers said. One-week rupee forwards, which act as a proxy for the spot currency, traded at 145.50/60 per dollar, as compared with Wednesday's close of 145.45/55 at 0727 GMT.

The spot currency did not trade below 143.90, which is seen as the central bank's desired level.

($1 = 144.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

Union Assurance reports steady performance in 2015

Union Assurance PLC (UA) recorded steady growth in gross written premium (GWP) and profits in the first year operating as a stand-alone life insurance company.

GWP for the twelvemonths to the December 31, 2015 was Rs. 6.9 billion compared to Rs. 5.9 billion in the corresponding period, a growth of 17%. Profit after tax (PAT),includingthe gain from sale of the 78% shareholding in the non-life company to Fairfax Asia amounted to Rs. 2.3 billion. PAT excluding the disposal gain amounted to Rs. 1,125 million compared with the Rs. 881 million PAT reported in 2014.

As at December 31, 2015, UA’s life fund stood at Rs. 26 billion with a healthy solvency ratio indicating the financial strength of the business. 2015 was a remarkable year for Union Assurance, with one of the strongest performances in UA history.

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Orient Fiance posts RS. 113 mn PBT

Orient Finance recorded a commendable profit before tax of Rs. 113 million for the three months ended December 31, 2015 when compared with the profit before tax of Rs. 6.4 million in the corresponding period of last year.

Profit before tax for the 9 months ended 31st December, 2015wasrecorded as Rs.180.9 million, compared to a profit before tax of Rs. 39.8 million recorded for the corresponding period of last year. A deferred tax gain of Rs. 282Mn, on the purchase consideration paid to former shareholders of Orient Finance PLC (OFP) has been recognized in the comprehensive income, to the extent of future profit estimates thereby increasing the profit after tax for the 9 months ended 31st December 2015to Rs. 463Mn.

Turnover for the 9 months ended 31 December 2015 improved to Rs. 1,592 million from Rs. 1,225 million in the corresponding period of 2014. The cumulative provision for impairment for nine months period decreased to Rs. 225 million from Rs. 243 million. .

The Assets and Liabilities of former Orient Finance PLC were purchased by Bartleet Finance PLC and amalgamated as per the provisions of the Companies Act No. 07 of 2007 on 16th July 2015. Further, Bartleet Finance PLC is the surviving entity upon the completion of the amalgamation and continues its operations as a single legal entity. On 14th August 2015, Bartleet Finance PLC was renamed as Orient Finance PLC (OFP). The performance of this year is based on the amalgamated financials of the combined entity whilst the corresponding figures of last year are that of Bartleet Finance PLC.

With this amalgamation, the total assets of OFP as at 31st December, 2015 stood at Rs. 17.2 billion, whilst deposits from customers and advances to customers were Rs. 8.4billion and Rs. 13.5billion respectively.

The merged entity, OFP operates 25 branches with 05 Collection Centers covering major towns of the country including northern and eastern provinces.

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Sri Lanka shares end at over 1-week high

Sri Lankan shares gained on Wednesday to end at their highest in more than a week as investors bought beaten-down stocks, but concerns over a higher budget deficit and economic growth dampened investor sentiment, brokers said.

Sri Lanka's share trading was halted for 17 minutes in early trade due to a power failure.

The benchmark share index ended 0.85 percent up at 6,021.37, its highest close since March 4.

Investors preferred fixed interest rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank's unexpected interest rate hike in mid-February, dealers said.

"Despite uncertainties, the market ended up. Selling pressure was absorbed for the day, but it is difficult to say for how long," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Selling pressure is still there as investors are waiting to see the direction of the economy. At the moment, there is a gloomy economic outlook."

Sri Lanka's economy is expected to grow 5.3 percent in 2016, data from the state statistics office showed, but analysts say tight monetary and fiscal policies may curb its growth.

The $82.2 billion economy expanded at a sluggish 2.5 percent in the December quarter, down from an upwardly revised 5.6 percent in the previous quarter.

Analysts and economists worry slower growth could reduce corporate earnings of some listed firms.

Turnover stood at 921.9 million rupees, more than this year's daily average of 777.4 million rupees.

Foreign investors sold 221.4 million rupees ($1.53 million) worth of shares on Wednesday, extending the net foreign outflow so far this year to 656.8 million rupees worth of shares.

Shares in Lanka ORIX Leasing Company Plc jumped 6.41 percent, while Hemas Holdings Plc rose 2.15 percent and Sri Lanka telecom Plc rose 2.60 percent.

The central bank rejected all bids at a weekly t-bill auction on Wednesday for a second week after yields on short tenure bonds hit two-year highs after the central bank's unexpected hike in interest rates in mid-February.

"The rejection is to curb the high yields, but this is not sustainable as the government's short term financing including the maturing treasury bills would put more pressure on the government finances," said Shiran Fernando, an analyst at Colombo-based Frontier Research. 

($1 = 144.8500 Sri Lankan rupees) 

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

Sri Lankan shares end weaker; further fall expected

Reuters: Sri Lankan shares edged down on Tuesday, falling for a second session amid fears of further declines due to worries over a higher budget deficit and economic growth, brokers said.

The benchmark share index closed 0.15 percent lower at 5,970.40.

Investors preferred fixed interest rate bearing assets over shares due to a rise in yields on treasury bills, which are hovering at two-year highs, and on the central bank's unexpected interest rate hike in mid-February, dealers said.

"The market should decline as the economy is running into a sharp fiscal problem. The recovery would take longer as there is no visible trigger compared to what we saw after the war," said an analyst, asking not to be named.

The island nation's economy grew at 4.8 percent last year, slowing from the previous year's 4.9 percent, government data showed on Tuesday, while it expanded 2.5 percent in the December quarter, down from a revised 5.6 percent in the previous quarter.

Foreign investors sold 16.7 million rupees ($115,331) worth of shares on Tuesday, extending the net foreign outflow so far this year to 435.4 million rupees worth of shares.

Turnover stood at 731.4 million rupees, below this year's daily average of 774.4 million rupees.

Shares in Ceylinco Insurance Plc fell 0.79 percent while biggest listed lender Commercial Bank of Ceylon Plc eased 1.23 percent. 

($1 = 144.8000 Sri Lankan rupees) 

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

Sri Lanka’s Hayleys acquires 75-pct stake in Fentons for Rs963mn

(LBO) – Sri Lanka’s Hayleys has acquired 75 percent of the equity stake of Fentons Limited for 963 million rupees, the Company said in a stock exchange filing.

Fentons, established in 1921 is a leading electrical and mechanical engineering solutions provider for Building Systems and ICT Infrastructure.

“The management of Hayleys believes that there is a strong strategic fit between the two organizations,” the company said.

‘The acquisition will positively contribute to the Hayleys Group’s turnover and profitability considering the growing demand in the country’s infrastructure and support services sector.”

Sri Lanka gives official go ahead for China Port City

(LBO) – Sri Lanka’s government officially informed the Chinese investors of resuming the construction of the Port City project in capital Colombo, yesterday one year after its suspension, a foreign news agency reported.

According to China’s state media, Xinhua Sri Lanka’s Ministry of Ports and Shipping, in an official letter to the CHEC Port City Colombo (Pvt) Ltd, said that the company could resume the construction of the project immediately.

“At its meeting held on March 9, 2016, the Cabinet of Ministers has granted approval for the project to resume immediately,” the letter said.

“Accordingly the suspension effected by my letter dated March 6, 2015, is hereby withdrawn with effect from today (Monday).”

Earlier, Sri Lanka’s Prime Minister Ranil Wickremesinghe said that the country plans to have a ‘unique financial and business district’ in Colombo when the sea reclamation project by a Chinese firm is resumed.

The much talked project was under water for a long period of time as the new administration questioned project approvals by the last regime.

The builders of Sri Lanka’s Chinese-funded port city project told LBO in an earlier interview they were awaiting a positive reply from the government after the suspension of work citing environment concerns by the administration which came in to power in January.

The 1.4 billion US dollar Port City is to be constructed between the Southern edge of the new Colombo South Port and the Fort Lighthouse.

The total area of sea to be reclaimed is 252 hectares.

The Port City is expected to boost the local economy by generating millions of dollars upon its completion and generate over 80,000 jobs.

The project includes a marina and yacht club, a central boulevard, a sea view apartment complex and a five-star hotel, shopping and entertainment center, office space, a mini golf course, and many other modern facilities.

Sri Lankan share index falls below key 6,000 support level

Sri Lankan share index fell on Monday, snapping a two-session gaining streak as it declined below a key support level of 6,000 points, with foreign investors exiting the island nation's risk assets, brokers said.

The benchmark share index fell 0.67 percent or 40.52 points to 5,979.43.

The index had gained 2.7 percent in the last two sessions through Friday due to a technical rebound.

Investors prefered fixed interest rate bearing assets over shares due to a rise in the yields on treasury bills, which are hovering at two-year highs, in tandem with the central bank's unexpected interest rates hike in mid-February, dealers said.

"Economy is also fragile. Still we are at a critical stage, so there is not a lot of buying," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"Only high risk takers are buying. Retailers, institutions and others are still out of the market and we expect the market to trade between 5,800 and 6,000 points in short term."

Foreign investors were net sellers for a second striaght session, unwinding 155.9 million rupees ($1.08 million) worth of shares on Monday, extending the net foreign outflow so far this year to 418.7 million rupees worth of shares.

Turnover stood at 719.3 million rupees, below this year's daily average of 775.3 million rupees.

Shares in conglomerate John Keells Holdings Plc fell 1.95 percent, while Hatton National Bank Plc declined 2.04 percent. 

($1 = 144.8000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Union Bank records impressive growth in '15

Union Bank of Colombo PLC (UBC) and its subsidiaries concluded 2015 with a notable business performance; reflectedbya226% increase in post-tax profit that signals the strong growth momentum mobilised within the year.

The principal source of income from the Bank's fund based operations escalated to Rs.2,022 mn in 2015. This is an increase of Rs. 259 Mn or 15% compared to Rs.1,763 mn recorded in the previous year. It is a noteworthy achievement, given the substantial reduction in interest spreads experienced by the Bank during the year.

Net Interest margins dropped due to decreasing spreads and increased investments made in Unit Trusts during the year. Return on the Unit Trust investments are reflected under Net Trading Income of the Bank.

The Bank's Loans and Advances stood at Rs. 40,095 mn as at 2015 year-end. This is a Rs. 14,151 mn (55%) growth in comparison to the previous year, and is the highest absolute growth achieved by the Bank since its inception. The Deposits Base of UBC stood at Rs. 37,652 mn as at year-end. This is a Rs. 9,844 mn (35%) growth in comparison to 2014.

The growth in Fixed Deposits was recorded asRs. 7,719 mn.

The Bank focused on an aggressive CASA (Current and Savings Accounts) drive which was supported by several strategic initiatives such as; the expansion of the off-site ATM network, introduction of Debit Cards, setting up a dedicated sales force and rebranding the branch outlook. CASA recorded a growth of 33% in comparison to 2014.

The Fee and Commission Income of the Bank was Rs. 226 mn which translates to a year-on-year growth of 15%.

UBC reported a Net Trading Income of Rs. 278 mn, which is a significant growth of 189% year-on-year.

This was due to an increase in investments made in the Unit Trusts. In 2015, UBC made a strategic decision to exit the equity trading portfolio and held no trading stocks as at the year end.

Other Operating Income of the Bank was Rs. 359 mn, which reflects a growth of 28% year-on-year.

This was mainly attributed to the 73% growth reported in Foreign Exchange gains.

The Bank was affected with one of the highest NPL ratios in the industry in mid-2014.

The NPL ratio improved significantly to 2.7% as at the reporting date. NPL ratios as at the end of 2014 was 7.4%. Reflecting a noteworthy improvement in portfolio quality, the Credit Loss Expense of the Bank reduced to Rs.176 mn from Rs. 541 mn in 2014.

Operating expenses of the Bank was Rs. 2,334 mn which is a 42% increase year-on-year.

This was mainly due to the strategic investments which included the expansion of network and reach along with investments made in technology and human resources during the year.

The Bank maintained a healthy Liquid Assets Ratio throughout the year. UBC continued to maintain a healthy Capital Adequacy Ratio which is well above the regulatory requirement, reporting a 24% core capital ratio as at the year-end.

The Group, consisting of the Bank and its two subsidiaries - UB Finance Company Limited and National Assets Management Limited reported robust results in 2015. The Group reported pre and post-tax profits of Rs. 292 mn and Rs. 255 mn, compared to Rs. 161 mn and Rs. 78 mn reported in 2014.

The Group recorded significant volume growth in terms of loans and advances growing its portfolio to Rs. 45.5 bn in 2015, an increase of 56% year-on-year.

This was a result of the Bank's intention to grow the book aggressively while maintaining a profitable mix. The Bank contributed to 88% of the Group's total loans and advances.

The Group also recorded a significant increase in customer deposits recording a portfolio of Rs. 41.6 mn in 2015, a growth of 37% year-on-year. The Bank contributed 90% of the Group's total customer deposits. Fixed Deposits accounted for 78% of the total deposits base and grew by 39% year-on-year.

The Group reported a 15% increase in fee based operations. Trading and other income also reported a strong performance, recording a growth of 35% year-on-year. Director and Chief Executive Officer, Union Bank, Indrajit Wickramasinghe said, "We have completed a successful year of strong financial results, and significant reforms towards laying a solid foundation for more ambitious growth in the years to come."

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