Sri Lankan shares end weaker for fourth day; John Keells leads

Reuters: Sri Lankan shares fell for a fourth straight session on Thursday to a near 23-month low, led by conglomerate John Keells Holdings as concerns over rising interest rates and the country's rating downgrade dented sentiment, traders said.

Sri Lanka's benchmark share index closed 0.29 percent lower, or 17.50 points, at 6,060.91, the lowest close since April 7, 2014.

"There is no sign of resistance at these levels. We expect some kind of resistance at 5,800 points. Some block trades dominated the market and the balance is retail trading. Buying side is weak," said Prashan Fernando, CEO at Acuity Stockbrokers.

"The global economic situation has also hit sentiment. Things might change when we get the IMF loan. But the concern is the conditions the IMF may ask Sri Lanka to comply with," Fernando said.

On Wednesday, Fitch downgraded the ratings of some listed blue chip firms and strategic state firms after it downgraded Sri Lanka's sovereign rating to B-plus from BB-minus on Monday, citing increased refinancing risks, significant debt maturities, and weaker public finances. ,

The index remained in oversold territory for the eight straight session, with the 14-day relative strength index at 18.840 on Thursday, compared with Wednesday's 19.741, Thomson Reuters data showed.

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

Yields on treasury bills rose between 42 and 54 basis points (bps) at a weekly auction on Wednesday to a more than two-year high, extending the rise between 54 and 105 bps since the central bank raised the policy rates by 50 bps on Feb. 19.

Turnover was at 551.1 million rupees ($3.8 million), less than this year's daily average of 717.3 million rupees.

Foreign investors were net buyers for the fifth straight session, purchasing 136.4 million rupees worth of shares.

Shares in Nestle Lanka Plc fell 0.37 percent while conglomerate John Keells fell 0.90 percent and John Keells Hostels Plc slipped 5.38 percent. 

($1 = 143.6500 Sri Lankan rupees) 

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

Sri Lanka to lease vehicles on 5-year contracts for state work

ECONOMYNEXT - Sri Lanka plans to lease vehicles on five year contracts instead of purchasing vehicles outright for use by state agencies and state enterprises, cabinet spokesman, Gayantha Karunathilake said.

Finance Minister Ravi Karunanayake had proposed to get vehicles on 'operating leases' to support leasing companies and system is expected to be more efficient and cost-effective than maintaining a large state vehicle fleet.

The vehicles will be returned after 60-months and leasing companies will bear the cost of insurance and maintenance.

Sri Lanka Treasuries auction succeeds, one year yield spikes 50bp

ECONOMYNEXT - Sri Lanka's Treasuries yields rose across maturities and the 12-month yield rose 50 basis points to 9.0 percent at Wednesday's auction, data from the state debt office showed.

The three month yield rose 54 basis points from February 17 to 8.49 percent and the 6-month yield rose 42 basis points from a week earlier to 8.49 percent.

The debt office sold 15.9 billion rupees of three month bills, 7.6 billion rupees of 6-month bills and 3.0 billion rupees of 12-month bills, totalling 26.6 billion rupees.

There was an estimated 26 billion rupees of maturing bills this week indicating that the debt office, which is a unit of the Central Bank had a successful auction after a series of failed auction where maturing bills were repaid with printed money.

Over the past year the debt office drove long term bond yields to high levels, accepting bids far above offered volumes but printed money at the short end to generate balance of payments pressure.

The central bank generates inflation, balance of payments crises and busts the currency mainly by purchasing Treasury bills with printed money.

Sri Lanka's Laugfs gas sets up Dubai trading unit

ECONOMYNEXT - Sri Lanka's Laugfs Gas Plc, a cooking gas distributor with operations in Sri Lanka and Bangladesh said it had set up a fully owned unit in Dubai.

Slogal Energy Dmcc, will "carry out and streamline requisite trading activities and services in the Asian region," the firm said in a stock exchange filing.

Slogal Energy had been incorporated on November 15 and will start operations shortly, the firm said.

Sri Lanka's Hatton National Bank expects 15-pct credit growth in 2016

ECONOMYNEXT - Sri Lanka's Hatton National Bank is expecting to grow its loan portfolio 15 percent in 2016, driven by small and medium enterprises and personal banking, slowing from 26 percent last year, officials said.

HNB grew its loan book 26 percent with strong growth in corporate loans for working capital, projects and dollar denominated loans, Chief Executive Jonathan Alles told an analysts forum.

The bank had also loaned about 100 million in dollar loans including to Maldives based firms in partnership with other lenders, he said.

The margins in dollar loans to Maldives were higher than in Sri Lanka and closer to 7 percent, he said.

In 2015 the loans to customers grew 26 percent to 498 billion rupees with leasing vehicles also picking up sharply from 24 to 40 billion rupees.

Alles said car leases have already slowed, but they were seeing a pick-up in housing loans.

With higher salaries to state workers and a planned tax cut, increasing disposable income, there was also greater potential for personal loans.

Chief Operating Officer Dilshan Rodrigo said the bank was expecting 15 percent loan growth in 2016, with corporate loans slowing but SMEs and personal banking segments accelerating.

Margins were better in SME loans but they were the most risky with the highest defaults, he said. Corporate loans where margins were thin, had the lowest defaults, he said.

Personal loans fell in between.

The bank was also seeing growth in its micro lending.

Alles said the bank was gradually boosting its fee based income becoming active in trade services and also digital delivery.

The bank had invested in digital infrastructure and was able to re-deploy staff to sales, keeping overall costs down, Alles said.

The bank's cost-to-income ratio was about 46 percent and they were hoping to bring it down further. Centralized credit approvals had also reduced staff costs, he said.

Sri Lanka bourse launches multilingual web portal for investors

ECONOMYNEXT – The Colombo Stock Exchange (CSE) has launched a multilingual web portal to educate investors on the risks and rewards of investing in equities and other instruments.

“This is a very low cost way of doing it – you can educate yourself at home or anywhere,” CSE chairman Vajira Kulatilaka told a news conference.

“Knowledgeable investors is what we want, people who play the market knowing the risk, not just speculators.”

The web portal www.cse.edu.lk, delivers content in English, Sinhala and Tamil and offers learning material to the public through online courses, free and for a fee, webinars and publications.

Mithila Mendis, chief executive of thinkCube Systems (Pvt) Ltd., the technology firm which developed the portal said it offers services on any device at any time – mobile, tablet, or PC.

“The webinars allow for interaction – you can ask questions,” he said.

Kulatilaka said the portal will be upgrade to offer bourse games where users can build dummy stock portfolios and do mock trading without money before they invest for real.

Fitch downgrades SriLankan Bonds to ‘B+’

Fitch Ratings has downgraded the rating on SriLankan Airlines’s US dollar-denominated government-guaranteed bonds to ‘B+’ from ‘BB-’.

This follows the downgrade of Sri Lanka’s Long-Term Foreign and Local-Currency Issuer Default Ratings to ‘B+’ with a Negative Outlook. The national carrier’s bonds are rated at the same level as SLA’s parent, the state of Sri Lanka, due to the unconditional and irrevocable guarantee provided by the state.

The Sri Lankan sovereign faces increased refinancing risks on account of high upcoming external debt maturities amid the country’s vulnerability to a shift in investor sentiment. Furthermore, the sovereign’s external liquidity position remains strained, reflecting pressure on foreign-exchange reserves.The recent downgrade also reflects deteriorating public finances driven partly by consistently low general government revenues.

www.dailynews.lk

Bank of Ceylon (BoC) posts highest ever profit of Rs. 25 bn

Bank of Ceylon (BoC), has raised the bar by recording the highest ever profit of Rs.25.3 billion, made by a single commercial entity in the country.

This is a 25% growth over the previous year. Post tax profit at Rs. 16.1 billion recorded 19% growth over end 2014.

The BoC Group recorded Rs. 25.5 billion pre-tax profit achieving a 19% increase over the previous year while post tax profit was Rs. 16.2 billion with a 13% increase over 2014. The Group companies contribute 3% to the Group's total assets.

Interest income the main source of income of the Bank increased by 6% during 2015 while interest expense decreased by 4% resulting in a favorable net interest income with 23% growth. General Manager D.M. Gunasekera said: "Our winning team comprises of an experienced, qualified, seasoned and dynamic team, who provide the Bank with a competitive edge in the industry. We are operating in a highly techno driven rapidly changing environment. "The Bank's contribution to the Government by way of dividend and taxes amounted to Rs. 18 billion.

"As the giant in the banking industry we have been contributing to the country's development since our inception. We have funded many Government projects by delivering our fullest support to uplift our county in all aspects. Apart from providing finance base to deliver the Government mandates, BoC plays a major role in financial inclusion in the society by way of micro finance developments,financial entrepreneur development programmes for Small and Medium Enterprises (SMEs), school savings units, through the 625 branch network in the island,"Chairman Ronald Perera said.
www.dailynews.lk