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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Dhammika interested in more healthcare business

Dhammika Perera, Sri Lanka’s biggest entrepreneur/businessman, increased his presence in the healthcare sector, buying a larger stake in Nawaloka Hospitals (NHL) and raising his total holding to 24 per cent on Thursday. He told the Business Times that he’s interested in this sector and that he’s open to more deals such as this, triggering speculation in the stock market as to whether his interest would extend to opening a hospital chain in his organisation. Some 305.9 million Nawaloka shares were traded in three crossings at Rs 4 on Thursday early noon.

The NSB held 17.7894 million NHL shares as at last September and top market investor, Dr. S Senthilverl who held 309.5 million NHL shares or nearly 22 per cent, sold some 13.6 per cent to Mr. Perera, according to a stock market disclosure. Earlier on February 23, Dr. Senthilverl, a Director of Nawaloka Hospitals sold Rs.20 million Nawaloka Hospitals shares at Rs.3.80 per share to Mr. Perera who had also purchased the EPF’s stake of 1.76 per cent last week. “I bought some shares last month,” Mr. Perera said. The hospital is controlled by its Chairman Jayantha Dharmadasa with 32.83 per cent and Nawaloka Construction Company with 31.34 per cent. (DEC)

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Dian Gomes wants to share ‘Hela’ wealth

Hela Clothing, a clothing group which recently came under apparel expert Dian Gomes, plans to go public while also investing in Kenya, a source market for the US. The company plans to go public in about four years once it becomes a US$400 million organization, company Chairman Dian Gomes told the Business Times.

He said that in doing so they would be “sharing the wealth” with the people.
The company also plans to establish itself by buying more small local factories.
Commenting on his own work systems he said “People think I’m a radical, but I’m a socialist.”
He noted that Kenya is a market which has duty free access to the US for its products as a result of which they moved in with one plant.

The company has acquired six plants from Jinadasa company and plans more mergers with smaller companies, he explained. Currently, it has plants in Hambantota, Matale and Kurunegala and were marketing to clients like Calvin Klein, Marks and Spencer, Levis, Decathlon and Soma Intimates, a US brand.

When Mr. Gomes moved into Hela Clothing, it was a $80 million company with about 6,000 people and about six plants but has now grown to a $130 million company with 10,000 people. Retiring in December 2015 from MAS, Mr. Gomes joined Hela Clothing bringing in British national and former Merrill Lynch Chairman Robert Wigley as an investor in February this year. Marketing lingerie, casual wear and kids-wear, Hela joined Foundation Garments which has a history of about 25 years, it was noted.

Mr. Gomes explained that they were looking at making this industry much more productive through lean innovation and speed to the market with timely delivery. The ex-MAS Director has been able to attract a number of staffers from his previous workplace to join the new establishment having picked about two senior persons in this regard and a few others joining the new clothing line.

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Aitken Spence eyes more Port management deals abroad

By Duruthu Edirimuni Chandrasekera

The Aitken Spence group (Spence), hot on the heels of securing (part) ownership and management of all ports in Fiji, is searching for more regional opportunities to manage ports, officials said. According to them opportunities in the African region for port technical handling remain a top “priority”, a senior official told the Business Times. Aitken Spence presently conducts operations in several ports in South Africa and Mozambique. “Our programmes have been very successful and we have been able to cover all the major container terminals in South Africa.

It is the intention of Spence’s port efficiency enhancement and terminal management services arm, Port Management Container Services Ltd to expand their activities in the other African ports too,” the official said. According to him, Spence is eyeing more port management contracts not only in Africa but elsewhere in the region as well. He added the company is looking at other regions and is interested in the Free Trade Agreements with Pakistan, India and China which will increase the demand for the freight and logistics businesses for Spence. Aitken Spence PLC has a 20 per cent shareholding in Fiji Ports Corporation Ltd, the first ever public-private partnership by a Sri Lankan company.

The local firm also entered into a public-private partnership acquiring a 51 per cent majority stake in Fiji Ports Corporation’s subsidiary, Ports Terminal Ltd in May 2013 for US$ 6 million to handle cargo activities in two ports of Fiji totaling to estimated capacity of 700,000 TEUs per annum. In August 2013 Spence took management control of the Suva and Lautoka ports also in Fiji for a period of 15 years. During the past years, the increase in profits from companies in the port management, ship agency and airline sub sectors contributed towards the profits of the Maritime and Logistics Sector, the official said.

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