Sri Lankan shares hit near four-month closing high as blue chips rally

Reuters: Sri Lankan shares rose for an eighth straight session on Thursday to their highest close in nearly four months led by blue chips such as Ceylon Tobacco Company Plc and John Keells Holdings Plc as continued foreign buying boosted sentiment.

The Colombo stock index ended 0.83 percent firmer at 6,250.04, its highest close since Dec. 19, 2016. The index rose 1.1 percent last week, posting its first weekly gain in six. The index climbed 4.60 percent in the last eight sessions through Thursday.

"Market bounced back from its oversold position on foreign buying, Thanks to the blue chip counters. But whether this trend will continue or not is the question," said Yohan Samarakkody, head of research, SC Securities.

"Everything depends on how foreign buyers react in the future."

Foreign investors net bought shares worth 256.6 million rupees ($1.69 million) on Thursday, raising the year-to-date net foreign inflow to 6.33 billion rupees in equities. They have net bought 3.84 billion worth equities in the past 13 sessions.

Turnover stood at 578.05 million rupees, less than this year's daily average of 745.1 million rupees.

Shares of Ceylon Tobacco Company Plc gained 3.44 percent, conglomerate John Keells Holdings Plc climbed 1.37 percent, while Colombo Cold Stores Plc rose 0.84 percent.

($1 = 151.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sherry Jacob-Phillips)

NDB Investment Bank concludes a private debenture issue

NDB Investment Bank Limited (NDBIB) successfully concluded the maiden unlisted debenture issue of Regional Development Bank (RDB). The Issue of 20 Million debentures (Rs. 2,000 Million) was fully subscribed as there was a high demand for the issue, from Institutional Investors.

An NDBIB press released said - ‘RDB issued two types of Rated Unsecured Subordinated Redeemable Debentures with fixed interest rates payable annually and semi-annually with a tenor of five (5) years. The issuer and the debentures are rated "[SL] A- with a stable outlook" by ICRA Lanka Limited.

‘Commenting on the transaction, Kaushini Laksumanage, Chief Operating Officer of NDBIB, "We are extremely proud of the trust RDB has placed in NDBIB to act as the Financial Advisors and Managers to their Debenture Issue. We continuously strive to add value to our clients through excellence and innovation by offering bespoke financial solutions."

‘Avanthi Dissanayake, Vice President, NDBIB stated "NDBIB has been a preferred partner for structuring debt instruments for many state and private entities due to its strong track record of structuring debt instruments that are specifically tailored to each client’s unique requirements. The debt team at NDBIB has best-in-class skills and experience to structure and execute advanced debt structures even under volatile market conditions"

‘The Company proposes to utilize the entire proceeds of the debenture issue to finance the rapid expansion of its lending portfolio. The lending portfolio of RDB increased at a CAGR of 17% over the period 2011-2015 and stood at Rs. 87.9 Billion as at the end of the FY 2015. The lending portfolio of the Bank increased YoY by 43% in 2015 primarily driven by the growth in disbursements of housing loans which constituted the largest segment of loans of the Bank as at the end of the FY 2015.

‘NDBIB was adjudged as the ‘Best Investment Bank in Sri Lanka’ for the fifth consecutive year at the Awards for Excellence by Euromoney, the world’s premier financial markets magazine in 2016. NDBIB was also adjudged as the "Best Investment Bank in Sri Lanka 2015"by the financial magazine Global Banking and Finance Review. The numerous awards mentioned above bear ample testimony to the continuous quest for excellence and innovation demonstrated by NDBIB within the investment banking sphere in Sri Lanka.

‘NDBIB is a fully owned subsidiary of NDB Capital Holdings Limited (NCAP), the holding company of the investment banking cluster of National Development Bank PLC. NCAP through its subsidiaries provide a wide array of capital market solutions, covering stock brokering, wealth management, and investment banking in both Sri Lanka and Bangladesh.

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Sri Lanka March tourist arrivals down 2.5-pct

The number of tourists visiting Sri Lanka down 2.5% in March 2017 from a year ago with strong gains seen from new markets like Eastern Europe.

Sri Lanka received 188,076 visitors in March and tourist arrivals in the first 3 months of the year have risen 3.4% from the year before, the tourist office said.

India remained the main market in March 2017 and followed by China (P.R.) and U.K.

Ceylinco Life policyholders to receive Rs 3.8 bn in bonuses

The highest bonus pay-out in the history of the company, this year’s payment is an increase of Rs 900 million or 31 per cent over that of 2016, reflecting the sector-leading growth recorded by Ceylinco Life in the past year, the company said.

Additionally, Ceylinco Life will help enhance the ‘Avurudu’ cheer of more than 15,000 policyholders with cash bonuses totalling Rs 92 million in the form of immediately encashable cheques that will arrive in the post during the Sinhala and Tamil New Year.

The Avurudu Cash Bonus,a feature unique to Ceylinco Life,to be paid this year is 39 per cent higher than the cash bonuses paid by the company in 2016.With this year’s cash bonus payments, the cumulative value of cash bonuses paid by Ceylinco Life thus far will exceed Rs 500 million.

“Everything we do is centred on adding value on behalf of our policyholders, and unstinted generosity is a key word at Ceylinco Life,” the company’s Managing Director and CEO R. Renganathan said. “We recorded excellent growth in 2016, and believe that our policyholders should share in our success.” In the case of annual bonuses, even policyholders who purchased their policies in December 2016 will be eligible to receive a bonus, in line with Ceylinco Life’s policy of declaring bonuses from the very first year of issue of a policy.

Cash bonuses are presented to Life policyholders who have completed their 10th, 15th, 20thand 25thpolicy years as at 31st December 2016. These bonuses are computed at Rs 100 for every Rs 1,000 of the sum assured for policyholders who have completed 25 years, while policyholders who have completed 20 years are eligible to receive a cash bonus computed at Rs 75 per Rs 1,000 sum assured, those who have completed 15 years Rs 50 per Rs 1000 sum assured and those who have completed 10 years Rs 25 per Rs 1000 sum assured.

This year, recipients of annual bonuses from Ceylinco Life who are under the age of 55 will also be made a limited-time offer – an opportunity to invest in a ‘Platinum Plan’ devised by the company.

It combines a new life cover and a fund, offering policyholders extra protection through a life cover as well as an attractive savings fund. The Platinum Plan will be available till June 30,2017 only, the company said.

Ceylinco Life’s 2017 annual bonus payout is based on the surplus generated by the company’s Life Fund in 2016. The Fund stood at Rs 78 billion at the end of the year, following a transfer of Rs 9.91 billion in 2016.

The market leader in Sri Lanka’s life insurance sector since 2004, Ceylinco Life has close to a million lives covered by active policies. The company is acknowledged as the benchmark for innovation in the local insurance industry for its work in product research and development, customer service, professional development and corporate social responsibility.

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Finance sector likely to experience dip in margins - First Capital Research

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With rising interest rates and bulk of the lending attached to leases, the finance sector is likely to experience a dip in margins according to First Capital Research.

Credit growth is expected to remain moderate around 16 to 18% despite deceleration from 2016. Despite rise interest rates and slower economic conditions FC Research expects NPL provisions of finance companies to continue to stay on the back significant price appreciations in the second hand vehicle market. Higher vehicle prices are likely to deter related borrowers from default while even if defaulted higher vehicles prices ensure finance companies of eliminating losses and recovering bad debts. FC Reserch expects the local finance sector to face moderately tough conditions to operate with thinning margins and new LTV regulations leading to slower and previous but moderate credit growth.

Finance sector comprises of licensed finance companies (LFCs) and specialised leasing companies (SLCs) represent 6% of assets of the Sri Lanka’s financial system and consists of 46 LFCs and 7 SLCs with a network of 1,259 branches. Despite slow economic conditions rise in (Non Performing Loans) NPLs are likely to be slow amidst price appreciation in vehicle prices as bulk of the lending is attached to vehicles. We believe the larger finance companies have an advantage with lower cost of funding and large conversion levels from leases to loans which improves re-pricing abilities at times of rising interest rates. Finance companies with better rating and larger asset base tend to have a lower cost of funding while some finance companies have already converted significant portions from loans to leases enabling them to re-price part of the assets in line with interest rates.
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