Sri Lankan shares hits more than 11-wk high

Reuters: Sri Lankan shares ended at more than 11-week high on Monday as investors bought beverage and banking shares amid foreign buying into the island nation's risk assets boosted sentiment.

The benchmark Colombo stock index ended up 0.93 percent, or 60.46 points, at 6,582.60, its highest close since May 25.

"The market moved up on thin volumes, but the market is looking better and better with the more stability coming into the market," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Investors hoped that the economic fundamentals would improve after the central bank on July 28 surprised the markets with a 50-basis points raise in its main interest rates aimed at curbing stubbornly high credit growth.

Foreign investors net bought 62.59 million rupees ($430,172) worth of shares, extending the net foreign inflow to 1.55 billion rupees worth of equities in the last 14 sessions.

However, they have sold 3.26 billion rupees worth of shares so far this year.

Turnover stood at 675.1 million rupees, less than this year's daily average of around 731.3 million rupees.

Shares in Nestle Lanka Plc jumped 10.25 percent while Ceylon Tobacco Company Plc gained 1.9 percent and Cylon Cold Store Plc rose 4.96 percent.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 0.96 percent.

Analysts said investors also shrugged off a Supreme Court order asking the parliament to stop considering a bill to raise the value-added tax as the draft had not followed due process.

The move could put in jeopardy the government's ambitious fiscal consolidation plan to reduce the budget deficit to 5.4 percent of gross domestic product from last year's 7.4 percent. 

($1 = 145.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Gopakumar Warrier)

Sri Lanka Dockyard makes modest recovery in June 2016 quarter

ECONOMYNEXT – Sri Lankan shipbuilder Colombo Dockyard said it made a net profit of Rs55 million in the June 2016 quarter as it recovered from losses caused by the cancellation of contracts owing to the oil price slump.

The yard, majority owned by Japan’s Onomichi Dockyard, had suffered a loss of Rs77 million in the March 2016 quarter after it was forced to cancel a new building order and lower prices for new ships ordered by clients serving the oil industry.

Colombo Dockyard had made a profit of Rs182 million in the June 2015 quarter.

Interim results filed with the stock exchange showed June 2016 quarter sales fell 29% to Rs2.6 billion from a year ago.

Earnings per share for the June 2016 quarter were 76 cents against Rs2.53 the year before.

For the six months ending June 2016, Colombo Dockyard reported a loss per share of 30 cents against EPS of Rs4.41 a year ago.

Sri Lanka's brewery makes Rs500mn loss after floods

ECONOMYNEXT - Sri Lanka's Ceylon Beverage holdings, brewer for Lion and Carlsberg in Sri Lanka lost 501 million rupees in the June quarter as a floods disrupted production, interim accounts filed with the Colombo Stock Exchange showed.

Revenues fell 36 percent to 5.93 billion rupees in the June 2016 quarter from a year earlier.

Sri Lanka experienced severe flooding in a low lying area near the capital Colombo where the factory is located.

Production is expected to resume later this year.

Lion Brewery said its brands will be made in breweries owned by its partner Carlsberg group.

The government has reduced duty on the firm's imports to allow it to import and sell beer.

Sri Lanka's The Sunday Times newspaper said customs duty for beer with alcohol of less than 5 percent has been cut to Rs129 per litre from Rs500 and for beer with over 5 percent alcohol to Rs246 from Rs500.

The firm will also pay taxes such as port and airport levy.

The import levies paid by the firm is expected to be broadly the similar to the excise duties it would have paid on domestically produced beer.

Sri Lanka's Bank of Ceylon net up 34.8-pct in June

ECONOMYNEXT - Profits at state-run Bank of Ceylon, the country's largest lender by assets grew 35.5 percent from a year earlier to 4.9 billion rupees helped by loss provisions reversals but net interest income fell amid rising rates.

Group interest income rose 14.1 percent to 33.4 billion rupees in the quarter and interest expenses rose at a faster 24.9 percent to 16.4 billion rupees slowing net interest expense grew only 0.2 percent to 12.89 billion rupees.

The bank grew customer loans 5.7 percent to 900 billion rupees from 851 billion rupees, in the six months to June.

It is also one of the biggest holders of government securities. During the six months it cut financial investments - held to maturity, to 235 billion rupees from 246 billion rupees in June.

There was only 15.7 billion rupees in the available for sale portfolio which is marked to market.

However when interest rates rise, the holding cost of the portfolio is reflected in net interest income.

Sri Lanka's interest rates are correcting after being held down by term repo terminations and outright money printing in 2015 as the budget deficit expanded.

The bank reversed 180 million rupees of loan loss provisions, compared to 3.4 billion rupees, provided last year, helping boost profits.

Fee and commission income was also down 13 percent to 1.25 billion rupees.

AIA Sri Lanka reports solid 1H 2016 results

AIA Insurance Lanka PLC and its subsidiaries consolidated revenue increased by 19 % to Rs 6,852 million driven by gross written premium (GWP) growth of 26 percent to Rs 4,858 million for the six months ended June 30, 2016.

The growth in GWP was mainly driven by persistency improvements and a change in premium mode mix. Conventional life GWP increased 32 percent to Rs 4,373 million and investment income went up 25 percent to Rs 2,297 million, benefitting from the increase in interest rates.

Consolidated profit after tax amounted to Rs120 million, an increase of 38 percent compared with Rs 87 million in the corresponding period in 2015. The surplus of the life insurance business is reported annually at the year end and is therefore not included in the half-year profit. Shah Rouf, Chief Executive Officer of AIA Sri Lanka said, “AIA Sri Lanka’s consolidated revenue was boosted by a solid 26 percent increase in our GWP compared with the first half of 2015. We believe this growth momentum will strengthen further in the second half.

AIA remains committed to growing our business both quantitatively and qualitatively and our execution of growth strategies this year has reflected this. We are always looking for ways to make doing business with us easy for our customers as well as our Wealth Planners. As part of this, the launch of mCash mobile phone wallet last quarter has already become a key premium collection method.”

William Lisle, Chairman of AIA Sri Lanka said, “Our initiatives under Premier Agency Strategy and Bancassurance partnerships are showing excellent results and we are confident that AIA Sri Lanka is well positioned to benefit from the growth momentum of the Sri Lankan life insurance market.”

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Amãna Bank Net Operating Income crosses Rs. 1 bn

Amãna Bank recorded another successful half year of banking operations by achieving a Profit Before Tax of Rs 78 million for the six months ending 30 June 2016, despite challenging and competitive market conditions.

Financing Income for the first six months improved remarkably by 35.7% to Rs 1.8 Billion indicating the Bank’s strong top line performance in its core banking activities, predominantly focusing on SMEs. Of this, Rs 950.9 million was recorded in Q2 2016 showcasing a significant growth of 40.7% in comparison to the corresponding achievement in 2015. Net Financing Income from core banking activities in 1H, grew year-on-year by 23.5% to reach Rs 866.3 million.

The Bank also recorded Rs 98.3 million in Net Fee and Commission Income during the first half reflecting a year-on-year growth of 35.2%.

Net Operating Income for the first six months surpassed the 1 billion mark to close the half at Rs 1.1 Billion, growing by 19.2% from 1H 2015. The Bank’s Total Assets grew during 1H to read at Rs 52.4 billion while its Deposit and Advance portfolios continued its upward trend ending at Rs45.4 billion and Rs 36.7 billion respectively. Despite the growth in advances and gradual seasoning of the asset book, the Bank continued to maintain an industry low Gross Non-Performing Advances Ratio of 0.95%.

Chief Executive Officer Mohamed Azmeer said, “the results achieved reflect the growing confidence the customers have placed in our people friendly banking model for which I am sincerely thankful. I am optimistic that this performance trend will continue for the second half of the year as we make steady progress to achieve the goals outlined in our 5 year strategic plan, with the core focus being SMEs.”

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