Sri Lanka Taj unit in the red on forex losses

ECONOMYNEXT - Taj Lanka Hotels Plc, a unit of India's Taj Hotels and Resorts reported losses of 28 million rupees in the March 2016 quarter down from a profit a year earlier, despite strong revenue gains as interest costs and forex losses took its toll.

The firm reported losses of 20 cents per share for the March quarter and 84 cents per share for the full year on total losses 116 million rupees, down from 190 million a year earlier.

Revenues rose 24 percent to 695 million rupees in the March quarter and costs rose 10 percent to 504 million rupees, allowing the firm to grow gross profits 82 percent to 191 million rupees.

Finance costs rose from 51 million rupees to 86 million rupees.

In the year to March finance costs rose from 157 million rupees to 383 million rupees. For the year unrealized forex losses rose from 47 million rupees to 244 million rupees.

Sri Lanka's rupee fell from 131 to 148 to the US dollars over the past year as the central bank printed money to keep interest rates down despite a rising budget deficit.

Taj has dollar revenue which push up rupee nominal income but it also has forex borrowings which also go up when the domestic currency falls.

Sri Lanka Dockyard in Rs77mn March quarter loss

ECONOMYNEXT – Sri Lanka’s Colombo Dockyard suffered a loss of 77 million rupees in the March 2016 quarter against a profit of 135 million a year ago, a stock exchange filing said.

Sales of the yard, majority owned by Japan’s Onomichi Dockyard, fell 26% to 2.7 billion rupees.

The yard has been hit by the downturn in oil prices which has affected the offshore oil field support sector

Colombo Dockyard declared a loss of a billion rupees in the December 2015 quarter as it was forced to cancel an order and lower prices for new ships ordered by clients serving the oil industry.

Sri Lankan shares fall on profit-taking; John Keells down

Reuters: Sri Lankan shares edged down on Tuesday from its highest close in more than four months hit in the previous session, on profit-taking led by John Keells Holdings Plc as investors cautiously awaited March quarter earnings.

Analysts also said investors were concerned that the government's move to increase the value added tax and impose new taxes, effective May 2, would hit the bottom line of many companies.

The benchmark stock index ended down 0.56 percent, or 37.61 points, at 6,670.79, slipping from its highest close since Jan. 8 hit on Monday.

"There was lack of retail investor participation as all are waiting for March quarter for directions," said Prashan Fernando, COO at Acuity Stockbrokers.

Shares of conglomerate John Keells Holdings Plc fell 1.34 percent, while biggest listed Lender Commercial bank of Ceylon Plc lost 2.03 percent and Ceylon Tobacco Company Plc declined 2.58 percent.

Turnover was 710.7 million rupees ($4.86 million), less than this year's daily average of around 784 million rupees.

Foreign investors were net sellers of 3.93 billion rupees worth of shares so far this year, but they net bought 47.6 million rupees worth of shares on Tuesday.

The 14-day relative strength index, which is in an overbought region, stood at 75.128 on Tuesday, compared with Monday's 83.127, according to Thomson Reuters data. A level of 70 and above indicates the market is overbought. 

($1 = 146.2500 Sri Lankan rupees) 

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

CDB to issue ten million debentures

Citizens Development Business Finance PLC (CDB) has obtained permission from Colombo Stock Exchange to issue ten million debentures at a par value of Rs. 100.

CDB was incorporated as a Public Limited Liability Company in 1995 and has been granted a (SL) BBB (stable) rating from ICRA Lanka Ltd. and is a listed Public Company on the main board of the Colombo Stock Exchange (CSE).

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Nations Trust Bank commences year with steady performance

Nations Trust Bank closed the first quarter ending March 31, 2016 recording a post-tax profit growth of 20% underpinned by a moderate growth in non fund base income of 17% and a reduction in impairment charges by 63%.

CEO and Executive Director Renuka Fernando said the performance of the Bank in the quarter has withstood multiple challenges and they remain undeterred in managing these challenges and achieving goals set for the year. The first quarter performance was achieved under challenging conditions as the industry entered the year 2016 witnessing rising interest rates and further depreciation of the rupee. Net interest income contracted marginally for the period due to NIM compression as cost of deposits increased at a faster rate than the re-pricing of loans.

The resultant increase in interest expense of 31% over the previous period was only partly offset by the increase in interest income of 12%. Net fees and commission income recorded a growth of 17% for the period primary driven by higher FX income and lower losses in the Income Statement made on account of the FIS portfolio for the current period vis a vis 1Q 2015.Foreign exchange income recorded a growth of over 50% with enhanced customer volumes and favourable rate movements benefiting proprietary trading.

The Bank continued to look towards enhancing its fee based income from products such as debit cards, transactional accounts and trade related products.

Impairment charges recorded a 63% decrease mainly on account of individual impairment with collective impairment also showing an improvement across all portfolios. Expenses recorded a growth of 15% with personnel and other operating expenses contributing towards the increase. Other operating expenses growth is on account of increases in supplier tariffs, processing of volumes and brand enhancing activities. Cost management initiatives coupled with the implementation of lean concepts across the organization has assisted in containing some of the key cost lines to minimal increases during the quarter. The increase in the Cost:Income ratio for the current period is mainly owing to the slow growth in revenue as a result of the drop in NIMs.

Loans and advances portfolio of the Bank recorded a marginal growth mainly due to the volatility seen in the corporate portfolio but a commendable growth of 10% was seen in the SME book thereby cementing a strong base for further growth in the ensuing months.

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DFCC capitalises on synergies, closes strong in Q1

DFCC Bank, presented good progress on all fronts. As the Bank changed its financial year-end from March 31 to December 31 in 2015, the performance reported for the period January 1, 2016 to March 31, 2016 is compared with the results of the period January 1, 2015 to March 31, 2015 as opposed to the first quarter of the last financial period. (April 1, 2015 to June 30, 2015)

DFCC Group recorded a growth in consolidated profit before tax of 26.8% to Rs 1,085 million from Rs 856 million in the previous period. Meanwhile, profit after tax grew by 14.8% to Rs 970 million from Rs 845 million.

Total assets of the Group stood at Rs 256,140 million as at March 31, 2016 compared to Rs 247,109 million as at December 31, 2015. By far the largest contribution to profits and assets was from DFCC Group’s Banking Business, which is its core business.

Accordingly, profit after tax of the Banking Business grew by 17.5% to Rs 926 million from Rs 788 million in the comparable (for DFCC Bank and DFCC Vardhana Bank) period. Net interest income (NII) increased by 3.6 % to Rs 1,788 million from 1,726 million and net fee and commission income increased by 8.4% to Rs 296 million from Rs 273 million.

Commenting on the results, Chief Executive, Arjun Fernando said, “DFCC Bank delivered a good performance in many areas compared to 2015.

Even more importantly we have made good progress in our integration efforts following our amalgamation with DFCC Vardhana Bank last year. A well-defined integration road-map was put in place to capitalise on the strengths and ensure the best combinations, and the synergies we have achieved through this amalgamation have been significant.

Overall, we have been further strengthened and it has created value for all our stakeholders. Our goal is to continue the progress, with further operational and service benefits to come in the near future including rapidly growing our digital reach and our footprint across the country. DFCC Bank is well positioned to ‘Keep Growing’.”

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Amana Bank’s impressive growth continues

Amana Bank continued its profitability trend in first quarter 2016 by achieving a Profit Before Tax of Rs 50.5 million for the first three months ending 31 Mach 31 2016.

This is a significant growth of 119% compared to the profits earned in the corresponding period in 2015. Recording a 66% increase, the Bank’s post tax profit for the quarter stood at Rs 38.2 million from Rs 23.1 million achieved twelve months ago.

The Bank, which operates on the concept of non-interest based banking, also witnessed commendable results in its top line performance.

Financing Income continued to be impressive with a growth of 30.7% from Rs 661.1 million in Q1 2015 to Rs 864.2 million whilst Net Financing Income from core banking recorded Rs 408.5 million in Q1 2016.

Net Fee and Commission Income, through focused business strategies, increased by 38% to record Rs 47.5 million as opposed to Rs 34.4 million in the corresponding period of 2015.Net Operating Income of the Bank reached Rs 569.4 million reflecting a growth of 26.8% from Q1 2015.

Chief Executive Officer Mohamed Azmeer said this is a good start for the year 2016 and surpassing the Rs 50 billion in Total Assets well ahead of time is a very significant milestone in our journey. This sustained performance of ours is owing to our strong customer engagement, business alignment, service focus, processes improvement, cost containment and optimization of resources while managing the overall risk which is in line with our strategic plan.”

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NSB first q1 profit tops Rs. 2.35 bn

The National Savings Bank has posted a profit after tax of Rs 2.35 billion for the first quarter of 2016. Profit Before Tax is Rs.3.1 billion. The deposit base of the Bank has surpassed Rs.600 billion by end of March 2016 supported by the growth of both savings and fixed deposits.

The Bank also witnessed a positive change in deposit mobilization mix during the first three months of the year. The total mobilization for the period was Rs. 20,265 million which consisted of Rs. 7,518 million in savings deposits.

The total assets of the Bank increased over Rs.850 billion during the first quarter of 2016.

The Bank focused on improving the asset quality of the credit portfolio with the resultant improvement in NPL ratio. NPL ratio of the Bank has improved to 2.3% by the end of March 2016 when compared to 7.2% NPL ratio reported in the corresponding period last year, a significant achievement to further strengthen the financial health of the Bank.

Mark to market losses of both Equity and Government security trading portfolios unfortunately increased to Rs. 1,167 million when compared to a loss of Rs.450 million recorded in the corresponding period last year. Reasoning for these increased losses were the bearish trend experienced in the stock market and the rising market interest rates.

Despite these market challenges, the Bank recorded a Profit before Tax (PBT) of Rs.3,095 million compared to Rs.2,980 million reported in the same period last year. Profit after Tax (PAT) reached Rs. 2,350 million compared to Rs. 1,840 million reported during the corresponding period last year.

Net Interest Margin declined marginally to 3.12% in 1Q 2016 from 3.32% recorded at the end of 2015 due, to relatively higher interest cost. Return on Average Assets (before tax) declined to 1.45% as at 31st March 2016 from 1.60% recorded as at 31st December 2015.

During the first three months of the year retail lending portfolio of the Bank has recorded a growth of 4% with personal loans reporting a growth of 22%. Although the Pawning Portfolio continued with its negative growth the overall lending portfolio of the Bank reported a 3.6% growth in 1Q 2016.

The Bank’s Tier 1 capital adequacy ratio stood at 17.09% while the total capital adequacy for the reviewed quarter was 16.08%. These ratios however, remain well above the regulatory standards for well capitalized banks. Liquidity ratio of the Bank stood at 78.74% by the end of March 2016, which is well above the regulatory requirement of 20%.

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