Sri Lankan shares close near 2-yr lows on ratings downgrade

Reuters: Sri Lankan shares fell more than 1.2 percent to close at its lowest in nearly two years in thin trade on Tuesday after Fitch Ratings downgraded the country's rating, while rising market interest rates also dampened market sentiment.

On Monday, Fitch downgraded Sri Lanka's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to B-plus from BB-minus on increasing refinancing risks, significant debt maturities, and weaker public finances.

Sri Lanka's benchmark share index closed 1.27 percent lower, or down 78.41 points at 6,113.40, the lowest close since April 11, 2014.

"It's a horrible day. Today market dipped mainly because of the Fitch downgrading," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

"Rating of a country is one key area investors are looking for. When it's downgraded, it's going to impact."

Investors are waiting for the country's negotiations with the IMF for a loan to progress in order to gauge the direction of the market, analysts said.

Sri Lanka is in initial talks with the IMF about a loan amid concerns over pressures on its balance of payments, outflows from government bonds and a ballooning fiscal deficit.

The index remained in the oversold territory for the sixth straight session, with the 14-day relative strength index at 21.663, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

The 182-day and 364-day t-bill yields rose 50 to 55 basis points last week to a more than two-year high, after the central bank raised key policy rates by 50 basis points from record lows.

Turnover was 566.9 million rupees ($3.94 million) on Tuesday, below this year's daily average of 705.5 million rupees.

Foreign investors were net buyers for the third straight session, purchasing 14.5 million rupees worth of shares on Tuesday.

Shares in Ceylon Tobacco Company Plc fell 2.99 percent, while Bukit Darah Plc fell 6.27 percent and Carson Cumberbatch Plc fell 13.25 percent.

Conglomerate John Keells Holdings Plc fell 0.88 percent. 

($1 = 143.8000 Sri Lankan rupees) 

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

Pan Asia Bank crosses Rs.1 bn Profit After Tax

Assets top Rs.100bn mark to reach Rs. 108 bn

Pan Asia Banking Corporation PLC saw its post tax profit for the year ended December 31, 2015 (FY'15) increasing by as much as 151% to surpass the key milestone of achieving a billion rupee profit.

The bank closed the year with a post tax profit of Rs.1.04 billion well supported by the above average growth in gross loans and advances, higher margins and improved efficiency.

The earnings per share has risen to Rs. 3.53 from Rs.1.41 a year ago.

Meanwhile for the quarter ended December 31, 2015 (4Q'15) the bank has increased its after tax profit by as much as 110% to Rs. 289.6 million.

The bank has grown its net loans and receivables by as much as 40% or Rs. 23.9 billion during the year to Rs.84.2 billion. This is by far the highest growth in net loans and advances recorded by a licensed commercial bank in 2015.

This is also above the economy's private sector credit growth of 24% for the first eleven months.

Commenting on the results in 2015, the bank's Director and Chief Executive Officer Dimantha Seneviratne said the bank was able to record this exceptional performance due to proactive decisions and effective execution of strategies capitalizing on the opportunities in the macro-economy while managing the risks.

"This performance reflects the immense potential of Pan Asia Bank and our contribution to the economy where we have disbursed our funds in to all sectors and regions in the country. Our Retail, SME and Corporate segments reached out to all areas of the country uplifting many industries and living standards of the people whilst creating financial inclusion," he added.

At a time when the banking sector Return on Equity (RoE) comes under pressure due to narrowing margins, Pan Asia Bank has continuously driven its return to its share holders up to 19.94% by the end of FY 2015, virtually doubling the RoE from 9.81% in December 2014. The bank's RoE is now amongst the highest in the industry and beyond.

The bank has made tremendous progress in its core-banking performance as its fourth quarter Net Interest Income (NII) has risen by 23% to Rs.1.04 billion and the entire year's NII increased by 45% to Rs.3.96 billion..

Despite the pressure on banking sector margins, Pan Asia Bank has expanded its net interest margin to 4.34% from 3.82% in December 2014 due to prudent re-pricing and proactive assets and liability management.

In order to support its lending drive, the bank raised Rs.4 billion in debentures at very competitive rates which was oversubscribed on the opening day itself, demonstrating the strong confidence placed by investors on the bank's current and future strategies. - Pan Asia Bank

www.island.lk

COMBank’s Rs. 7 b debenture issue snapped up

The Rs. 5 billion debenture issue of Commercial Bank with option to go up to Rs. 7 billion has been oversubscribed yesterday which was the official date of its opening.

The Bank said that as of 4.30 p.m. yesterday the first tranche of Rs. 5 billion has been oversubscribed. As per the prospectus, the issue was closed and with the option to go up to Rs. 7 billion, applications received after the announcement of the over subscription will be accommodated.

The listed, rated, unsecured, subordinated, redeemable debenture issue had two types of debentures, Type A with a five year tenure and Type B with a 10 year tenure. The five-year debentures carry a fixed interest rate of 10.75% p.a. (AER 11.04%) payable semi-annually, while the ten-year debenture offered a fixed interest rate of 11.25% p.a. (AER 11.57%), also payable semi-annually.

www.ft.lk

Sri Lanka Insurance records high growth in 2015

The Sri Lanka Insurance Corporation (SLIC) has bounced back with significant growth achieved in both general and life business in 2015.

It has further consolidated its leadership in the general insurance business which grew by 12% in 2015 while the growth in long term insurance was 27%. These achievements are significant considering the fact that in 2014 general insurance business grew by 10.9% and life by only 5.6%.

SLIC’s overall market share in general business is now at 21% and nearly Rs. 500 million above the nearest competitor. SLIC’s motor business has grown by 25% and is ahead of number two by a margin of Rs. 955 million.

In life business, SLIC’s market share has increased by 1% to 20% thereby retaining its number two slot. Gross Written Premium in life was over Rs. 10 billion in 2015. (In 2014 the life insurance market share was 18.19% and in general it was 21.47 %.)

“We have grown above industry average in 2015 and the entire SLIC team is determined to grow further in 2016 and beyond. Our goal is to achieve a 25% market share in a few years time,” said Hemaka Amarasuriya, who took over as SLIC Chairman in February last year.

In terms of its managed asset base, SLICs figure of Rs. 170 billion is the biggest including the largest life fund worth Rs. 74 billion. The state owned giant also enjoys a strong capital of Rs. 6 billion. Last year SLIC declared the insurance industry’s highest ever bonus of Rs. 4.7 billion to its life policy holders of 2014. The quantum for 2015 will be determined next month.

The impressive turnaround at SLIC was not accidental. Whilst economic conditions were stable the insurance industry continues to be plagued by stiff competition. “SLIC has a well educated and experienced team. With the right motivation great results are possible,” said Amarasuriya, who is a highly respected business leader having steered Singer Sri Lanka for several decades.

Amarasuriya is no stranger to the insurance business. Aside from being a customer of SLIC previously, he also served as Chairman of the then Eagle NDB Insurance (predecessor to AIA Sri Lanka) for two years when he held the post of Chairman NDB Bank Plc.

Noting that he accepted the invitation to serve as Chairman at SLIC in good faith as a way of giving back his private sector experience to a state owned entity, Amarasuriya acknowledged that the SLIC on its own is a very robust organisation. “Our 2015 performance is ample proof that SLIC can swim well in difficult waters,” he added.

The overall long-term market has high prospects since insurance penetration is only 12% and SLIC has joined a welcome industry initiative to enhance positive awareness on the benefits of life insurance.

SLIC is powered by the most experienced technical knowledge with a staff of over 2,000 and over 10,000 advisors with a branch network of 126. “Staff and agents or advisors are the backbone of SLIC and they are being continuously motivated,” the Chairman said adding that the team is also leveraging the strong brand of SLIC in its outreach marketing.

SLIC is currently in the process of streamlining the claim handling process and steps are underway to implement a new system which enables instant service. A revamp of SLIC’s efficiency by introducing a comprehensive integrated IT system is also being pursued in 2016.

Over the years, the strong capital base, financial stability and proper reinsurance arrangements have paved the way for SLIC to make many historical milestones including honouring the largest claim ever to be paid in Sri Lanka of Rs. 39.5 billion. At present, around Rs. 450-500 million worth of claims are settled daily y SLIC. 

SLIC awaits Govt. directive on segregation
State owned industry giant Sri Lanka Insurance Corporation is awaiting a proper Government directive over the regulator directed segregation of general and life business.

“We have written to the Government and are awaiting a directive,” SLIC Chairman Hemaka Amarasuriya said.

The Insurance Board of Sri Lanka requires the hitherto composite insurance companies to segregate their general and long term insurance businesses by early last year. Apart from SLIC, three other entities are yet to segregate their businesses. The other three are MBSL Insurance Company Ltd, LOLC Insurance Company Ltd and Seemasahitha Sanasa Rakshana Samagama. The insurance industry includes 11 registered to carry on Long Term (Life) Insurance Business while 14 are registered to carry on only General Insurance Business.

Amarasuriya said that the SLIC has had various structures in the recent past including a process of privatisation and re-vesting to the State. “Since the Government is the shareholder a directive from the State is expected,” he said adding that stability of SLIC and security of jobs of employees needs to be considered.

IBSL also requires insurance companies to be listed on the Colombo Stock Exchange and SLIC is awaiting a Government directive on this as well.

www.ft.lk

DFCC goes for Rs. 7 b debenture issue

DFCC Bank aims to raise Rs. 7 billion by way of a listed debenture issue which has received the preliminary approval from the Colombo Stock Exchange (CSE).

The Bank will be offering 50 million rated, senior, unsecured, redeemable debentures at an issue price of Rs. 100 each, with an option to issue up to a further 20 million of the said debentures in the event of an over subscription at the discretion of the Bank.

The official opening of the issue is slated for 10 March but the public can start subscribing from today. These three year debentures rated AA- by Fitch will carry 10.625% payable annually (AER 10.625%).

Funds raised through the Debenture offering will supplement the ongoing deposit mobilisation drive of the bank to support the lending and investment activities of DFCC as part of its normal course of business for the year ending 31.12.2016.

DFCC will also use these mobilised funds to support lending in the SME sector, Personal financial

Services and Project financing. Medium term Debentures Issue would enable DFCC to better manage its asset and liability maturity mismatches and interest rate sensitivity gaps.

The joint managers to the issue are Acuity Partners Ltd., and People’s Bank Investment Banking Unit. The relevant structuring partner is DFCC Bank and placement agent is First Capital.

DFCC’s total assets grew by 17% to Rs.247 billion as at December 31, 2015 from Rs.210.6 billion as at March 31, 2015. This included a credit portfolio growth of 18% to Rs.171 billion from Rs.144.9 billion. DFCC Bank’s net PAT as at December 31, 2015 was Rs.1.6 billion (group) down by 63% and Rs.1.07 billion (bank) which declined by 67% compared to FYE results at March 2015 where it was recorded at Rs.4.4 billion and Rs.3.24 billion, respectively.  

www.ft.lk

Fitch downgrades Sri Lanka to ‘B+’; Outlook Negative

Fitch Ratings has downgraded Sri Lanka’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to ‘B+’ from ‘BB-’.

A Negative Outlook has been assigned to the IDRs.

The issue ratings on Sri Lanka’s senior unsecured foreign- and local-currency bonds are also downgraded to ‘B+’ from ‘BB-’. The Country Ceiling is downgraded to ‘B+’ from ‘BB-’ and the Short-Term Foreign-Currency IDR is affirmed at ‘B’.

“The Sri Lankan sovereign faces increased refinancing risks on account of high upcoming external debt maturities. Further, the sovereign’s external liquidity position remains strained, reflecting pressure on foreign exchange reserves.

In Fitch’s view, this partly reflects a weakening in policy coherence that increases the likelihood of Sri Lanka requiring external liquidity support from the IMF and other multilateral institutions. Sri Lanka’s external liquidity ratio, as measured by Fitch at the end of 2015, was 70.9%, which is far below the median of ‘B’-rated peers’ of 171.9% and the ‘BB’ median of 152.4,”Fitch said.
www.dailynews.lk

Singer Sri Lanka ends FY 2015 with record growth

Singer Sri Lanka ended 2015 financial year with a record growth. Revenues reached Rs. 38.7 billion, recording an impressive growth of 30% when compared to the previous year.Group Net Profit surged to Rs. 1,236 million, an increase of 58% and Net Profit for the Company surged to Rs. 859 Million, an increase of 85%.

Group revenue and Net Income for the fourth quarter grew by 31% and 49% respectively.

The noteworthy figures are mainly due to strategic initiatives and expansion conducted by the Group and an improvement in the business environment.

The initiatives included opening new shops, dealers and channels of distribution,improving and renovating existing shops,securing new brands and distributorships,introducing new products and improving processes etc.

Despite the challenge of a sharp 5% devaluation of the Rupee in September, strong fourth quarter results were indicative of Singer Sri Lanka's strong market standing.

The company's product lines showed exceptional growth. This included its traditional core product lines such as refrigerators (25%), panel televisions (24%) and sewing machines (15%). A surge in sales was also reported for new products including mobile phones (93%), deep freezers (82%), computers (50%), washing machines (42%) and air conditioners (33%).

Leveraging its new distributorships and brands including DELL, SONY, SHARP and MITSUBISHI obtained in 2014 and 2015, the company experienced outstanding results for the year with sales notching Rs. 3.6 billion in 2015 compared to Rs. 0.8 billion in 2014, a momentous 450% increase.

The company's listed subsidiary also performed well contributing to the bottom line. Singer Finance (Lanka) PLC showcased an increase 5% revenue, with a Net Profit of 24%, for the year.

The company's new subsidiary Singer Digital Media (Pvt) Limited, specializing in the sale of mobile phones and computers to the trade channel reached Rs. 3.5 billion revenues to external parties.

With an aim of strengthening its corporate leadership Singer (Sri Lanka), acquired controlling stakes of domestic consumer durable manufacturers Regnis (Lanka) PLC and Singer Industries Ceylon PLC from parent company Singer (Sri Lanka) B.V. during the 2015 financial year. These companies are now subsidiaries of Singer and promise to showcase even stronger results. As the Group sets its sights on new horizons the Group is confident of its future success.
www.dailynews.lk

Amãna Bank turns around with a pre-tax profit of Rs 218 Million

Amãna Bank recorded its first year of core business profits in 2015 sustaining its trend in profitability which commenced in Q4 2014.

The Bank recorded Rs 218.7 million as profit before tax for the year ended 2015 which marks a remarkable turnaround when compared to the pre-tax loss of Rs 80.2 million posted in 2014 constituting a growth of 372.5%.

The Bank’s top line recorded commendable growth with financing income reaching Rs 2.9 billion in 2015 whilst increasing its Net Financing Income by 22.4% to Rs 1.5 billion for the same period. Net Operating Income surpassed Rs 2.0 billion for the year ended 31 December 2015 reflecting a healthy growth of 31.1%. Through various initiatives for cost containment the Total Operating Expenses incurred were contained to a YoY increase of 7.5% to record Rs 1.7 billion.

Founder Chairman Osman Kassim said “The establishment of Sri Lanka’s first Islamic Bank was once only a vision and a dream. So I am indeed delighted today to witness the success and the realization of this vision. We have just crossed the first milestone in our journey. I am confident and eager about the future, where Amãna Bank rises to its full potential in its contribution to the country’s economy while believing in ‘superior customer service’ as its mantra to succeed.”

Chief Executive Officer Mohamed Azmeer said achieving a pre-tax profit of Rs 218 million was not an easy feat considering the market conditions that prevailed and the numerous challenges we had to face. Yet we were able to succeed thanks to our customers and the team’s dedicated execution of the Bank’s Strategic Plan”.
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SLT Group posts Rs 3.7 bn profit

Sri Lanka Telecom PLC (SLT) released its Company and Group financial performance during the year 2015. The group comprises of the holding Company Sri Lanka Telecom PLC and 8 subsidiaries, including the mobile arm Mobitel (Pvt) Ltd.

During the year 2015 the group was able to identify strong technology opportunities, accelerated programmes and remain in a strong position in the market place. All segments of the group contributed to a 5% year on year revenue growth for the group with a healthy position reporting Rs 68 bn in total. Effective cost control measures of the group capped costs at Rs. 48 bn for the year reflecting an increase of 4% year on year.

The significant revenue growth in the year resulted in Group Operating Profit Before Depreciation and Amortization of Rs. 20 Bn with a 7% year on year growth. This has also resulted in sustaining EBITDA margin at a healthy level of 29%. Depreciation and Amortization of the group increased marginally to Rs. 13.2 bn in line with group investment in infrastructure expansions. Yet the group reported a Rs.6.7 bn Operating Profit during the year under review with a strong year on year growth of 19%.

During the year appreciation of US Dollar against the Sri Lankan Rupee caused SLT group to incur Rs. 2.1 bn, in translation losses as the group opted for more foreign currency denominated loans, thus taking advantage of low interest costs by utilizing its capability to repay borrowings through internally generated foreign currency in-flows.

It is worth noting that TDC refund was not received in the year opposed to Rs 1.3 bn in 2014 thus reflected in profit before tax and profit for the year being Rs 5.5 bn and 3.7 bn respectively.

SLT reached the revenue milestone of Rs. 40 bn. in 2015 increasing 4% from the previous year. The increase was largely driven by investments to enhance capacities and introducing new technologies while focusing on customer services. Company expects a continued growth through accelerated i-Sri-Lanka program enabling Island wide high speed broadband, voice and IPTV connectivity augmented with technologies such as LTE and Fibre to home.

Group Chief Executive Officer Dileepa Wijesundera said the group has been able to respond effectively to the changes taking place in the economic and market conditions while investing over Rs.20 bn in capacity building, introducing new technologies, improving the automation of internal processes . We are now focusing to enrich our products more and more with superior quality and latest technologies enriching our customers. Therefore, the growth potential of the group is promising, he said.

Group Chairman Kumarasinghe Sirisena said the group is contributing to the wellbeing of people of the country and supporting to the State on economic development while benefitting investors. The results achieved during the year 2015 were very much encouraging, Sirisena said.

Mobitel (Pvt) Ltd. continued its growth momentum recording 6.4% growth in revenues for the financial year 2015.Mobitel recorded a sales turnover of Rs. 32.5 bn in 2015 compared to Rs.30.6 bn in 2014, an increase of Rs.1.9 bn.

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