Sri Lanka's Bank of Ceylon profits double, bonds losses not seen

ECONOMYNEXT - Profits at Sri Lanka's state-run Bank of Ceylon rose 101.6 percent to 4.43 billion rupees in the March 2016 quarter from a year earlier, helped by lower loan loss provisions, and losses from a large bond portfolio was not visible, interim accounts show.

Interest income rose 16.3 percent to 32.3 billion rupees and interest expenses rose at a faster 17.1 percent to 18.9 billion rupees and net interest income rose 15 percent to 13.6 billion rupees.

Fee and commission income fell 18 percent to 1.86 billion rupees.

Trading gains fell from 504 million rupees from 243 million rupees.

Loan loss provisions were sharply down at 586 million rupees, from to 4.1 billion rupees a year earlier.

The bank reported only 1.2 billion capital losses despite having a 262 billion rupee bond portfolio.

Bonds classified as available-for-sale (AFS) fell from 16.2 billion rupees to 14.9 billion rupees and 247 billion rupees of bonds were placed in the 'held to maturity' portfolio, where losses made when interest rates rise are not accounted for.

Losses on the AFS portfolio are adjusted against the equity.

Bank of Ceylon has a history of not accounting for both losses and profits from most of its bonds, partly to protect its capital from being eroded by government levies, when windfall profits are declared when BOP crises end and interest rates fall, long term watchers of the bank said.

Group gross assets rose 1.9 percent to 1.59 billion rupees. Net assets also rose 5.6 percent to 86.0 billion rupees, with most of its bonds not marked-to-market. 

Sri Lankan tea exports to Russia fall sharply

ECONOMYNEXT – Sri Lankan tea exports to Russia and other former Soviet states has fallen sharply in recent years, according to an analysis of exports done by a brokerage.

Russia and the CIS (Commonwealth of Independent States) were the prime destination for Ceylon tea exports during the first quarter 2016, Asia Siyaka Commodities said.

Export quantities to these countries improved marginally to 13.5 million kilos in the first quarter of 2016 from 13.1 million kilos the year before.

“Interestingly, Sri Lanka exported 16.9 million kilos in the first quarter of 2014 to this cluster and 17.5 million kilos in 2013 and in 2012 18.6 million kilos. This is a loss of 27% in four years,” Asia Siyaka Commodities said in a report.

Customs data analyzed by Siyaka Research shows total tea exports in March at 26.7 million kilos, up 6% on last year’s quantity of 25.1 million kilos.

In February 23.6 million kilos were shipped, up marginally from 2015. January’s 24.1 million kilos was nominally lower than 2015, the brokers said.

Tea exports in the first quarter of 2016 rose to 74.4 million kilos from 73.2 million kilos in January – March 2015.

Sri Lanka SEC freezes payment to Chinese investor over suspect stock deal

ECONOMYNEXT - Sri Lanka's Securities and Exchange Commission had ordered the payment on a sale of share Blue Diamonds Jewellery Worldwide Plc by its chairman Xia Liqiang, over suspected securities fraud.

The SEC ordered Capital Trust Securities, a Colombo based stock broker that sold the shares not to pay the Xia Liqiang for 15 million shares sold on May 09, and halt the payment if a cheque had already been issued.

SEC said it had reason to believe that the trade violated Sri Lanka's securities law and "one or more offences" may have been committed.

In February 2016, the SEC ordered a forensic audit of Blue Diamond Jewellery books (link).

SEC said at the time that shareholders and investors have alleged that September quarter accounts are misleading investors and money raised from a recent rights issue had been mis-used for the benefit of related parties.