Sri Lanka shares end higher led by large-caps

Reuters: Sri Lankan shares rose for a third straight session on Thursday led by large-caps on positive sentiment after the central bank left rates steady earlier this week.

However, analysts said investors were cautious and awaited the outcome of a loan deal with the International Monetary Fund.

The benchmark stock index ended up 0.13 percent at 6,442.53, its highest close since Jan. 14.

"It looks like new phase of wind blowing through the market. The negativity is fading away and buying is coming in slowly," said Reshan Kurukulasuriya, Chief Operating Officer at Richard Pieris Securities Pvt Ltd.

The central bank kept benchmark rates steady on Tuesday, as expected, as it gauges the effect of the recent tightening amid final stages of talks with the IMF for a $1.5-billion loan to tide over a payments crisis.

Yields on short-term government securities were also steady at a weekly auction on Wednesday.

The measures also signalled market interest rates may not rise as early as the market expected.

Turnover stood at 560.1 million rupees, less than this year's daily average of around 767.8 million rupees.

Foreign investors were net buyers of 15.5 million rupees ($106,382.98) worth of equities on Thursday, but have been net sellers of 2.97 billion rupees worth of shares so far this year.

Shares in Ceylon Tobacco Company Plc rose 0.91 percent while Ceylon Cold Stores Plc rose 2.85 percent. 

($1 = 145.7000 Sri Lankan rupees) 

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

Sri Lanka's People's Leasing group net up 2.1-pct

ECONOMYNEXT - Profits at Sri Lanka's People's Leasing and Finance, rose 2.1 percent to 1.15 billion rupees in the March 2016 quarter helped by profits at its insurance unit and a lower tax charge as interest margins at finance company was squeezed.

The group reported earnings of 75 cents per share for the quarter. In the year to March 2016, it reported earnings of 3.0 rupees per share on total profits of 4.7 billion rupees which rose 15.6 percent.

At the stand-alone company, the country's largest non-bank lender, profits fell 5 percent in the March 2016 quarter from a year earlier to 1.029 billion rupees despite a lower tax charge helping buffer a margin squeeze.

Interest income fell 4.3 percent to 4.4 billion rupees, interest expenses rose 5.5 percent to 2.0 billion rupees and net interest expenses income 11.6 percent to 2.3 billion rupees, in the quarter.

Loan losses were 32 million rupees compared to a write-back of 362 million rupees last year.

Loans grew 11.6 percent to 98.4 billion rupees in the year to March.


At group level interest income fell 3.2 percent to 4.5 billion rupees and net earned interest rose 9.3 percent to 844 million rupees in the quarter.

Group gross assets grew 1.9 percent to 131 billion rupees during the year. Net assets grew 11.9 percent to 24.6 billion rupees.

Union Bank excels in first quarter performance

Union Bank of Colombo PLC (The Bank) and its subsidiaries UB Finance Co. Ltd. and National Assets Management Ltd. (The Group) ended the first three months of 2016 with an impressive performance, reflecting a continued growth momentum with forward looking expectations.

The Bank’s post tax profit for the quarter is Rs. 80.4 mn, a 220% increase year on year (YoY). Total operating income of the Bank grew by 16% YoY to Rs.766 mn.

Net interest income (NII) of Rs. 443.8 mn recorded a 16% reduction over the comparative period ended March 31, 2015 due to a higher investment made in Unit Trusts of which the return is reflected in net trading income along with the narrowing margins.

Director and Chief Executive Officer Indrajit Wickramasinghe stated “We are off to a good start in 2016, and the Bank’s 1st quarter performance signifies the Bank’s capacity to reach the ambitious growth projected for the remainder of 2016. With the backing of a strong capital base and a focused strategic business plan; UBC is well geared to take on the challenges and opportunities of the market.”

Profitability was strengthened by much improved net fee and commission income, net gains from trading as well as other operating income. The Bank’s net fee and commission income stood at Rs. 61.7 mn at the end of Q1 2016, an increase of 146% over the comparative period with fee income from business lending, cards and trade transactions being the primary contributors of the said impressive growth. Net gains from trading led by investments in unit income recorded a growth of Rs. 115.3 mn YoY. The Bank does not have any exposure to the equity market.

Impairment charges have declined by Rs. 55.8 mn YoY, a 96% reduction owing to stringent management of recoveries. Net NPL ratio of the Bank has improved to 2.3% as at the end of Q1 2016.

The Bank’s total operating expenses increased by 23% to Rs. 672 mn due to the investments in staff and technology in keeping with the strategic plans. Corresponding to the above investments, the cost to income ratio of the Bank increased to 88% over 83% of the comparative period.

The Bank remains well capitalized within the minimum regulatory requirements, with Tier 1 Ratio of 24.9% and Tier 2 Ratio of 24.5%.

The Bank’s balance sheet expanded by 7% during the three months’ period to reach Rs. 75,823 mn in comparison to 31st December 2015. Loans and advances grew by 7.8% to Rs. 43,259 mn while the customer deposits reflected a growth of 13% to Rs. 42,598 mn.

The Group’s post tax profit for the quarter was Rs. 142.5Mn in comparison to Rs. 37.8 mn, an impressive growth of 276% YoY.

The total assets of the Group grew by 7% during the three months’ period to reach Rs. 82,078Mn, while the customer deposits reflected a growth of 12% amounting to Rs. 46,633 mn.

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