AIA delivers ‘record new business performance’ for First Quarter 2017

Mark Tucker, AIA’s Group Chief Executive and President, said:

"We are pleased to report that AIA has made an excellent start to the year with record VONB growth of 55 per cent to US$884 million. This is also the highest quarterly VONB result since our IPO in 2010.

"AIA continues to deliver a strong track record of year-on-year growth and our dedicated teams remain highly focused on building a high-quality, sustainable business for the long term. Today’s headline figures reflect our robust operating performance and the consistent execution of our growth strategy over time.

"I have said many times that the powerful and structural economic, social and demographic changes taking place across Asia present an unparalleled opportunity for AIA. The alignment of AIA’s significant competitive advantages developed over its long history in the region with these long-term structural trends means that the Group is exceptionally well-placed to help customers meet their substantial needs for financial protection, long-term savings and private healthcare provision through insurance.

"We were delighted to announce on 13 March that Keng Hooi will succeed me as Group Chief Executive and President upon my retirement from the Group. Keng Hooi has an outstanding track record of operational execution and strong leadership throughout his extensive experience in Asia.

"Since the announcement, Keng Hooi and I have been working very closely together to ensure a smooth and orderly transition and I am pleased to report that this process will be completed ahead of plan. As a result, we have announced today that Keng Hooi will formally assume his new role effective from 1 June 2017. I will remain a director of AIA Group Limited, in a non-executive capacity, from then until 31 August 2017.

"It has been a great privilege to lead AIA and I am enormously proud of the Group’s achievements since IPO. AIA is an extraordinary business and I am highly confident that the Group will continue its success under Keng Hooi’s leadership."

"VONB increased by 55 per cent to US$884 million with strong double-digit growth across the significant majority of our individual markets.

"AIA’s wholly-owned operation in China was our fastest growing business in the first quarter. Our focus on the sustained execution of our differentiated strategy through developing full-time professional agents who provide high-quality advice on comprehensive protection. - AIA
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Sri Lanka's Union Bank continues strong balance sheet growth Q1 2017

The first quarter of 2017 saw the Bank attaining strong Balance Sheet growth, and laid a solid platform for the remaining period of 2017. The Bank showed a strong 95% growth on Results from Operating Activities, recording Rs. 147Mn in comparison to Rs. 75Mn in the previous year, reflecting the successful implementation of the Bank’s strategic initiatives.

This was mainly attributable to the healthy increase in Net Interest Income of 73% despite the challenging Macro-Economic environment. During the period under review, the Bank remained focused on aiding the growth of Net Interest Income through prudent management of the Net Interest Margin coupled with the Total Asset growth. Net Fee and Commission income grew to Rs. 166Mn recording a 43% increase as a result of the successful implementation of the Bank’s long-term strategic plans for fee based products.

A change in the Asset Mix of the Bank brought about a decline in the Net Trading Income as funds were shifted to Interest Earning Assets from Investments in Units. This trade-off in income is a partial contributor to the increase in Net Interest Income.

The Impairment charge for the period increased by Rs.91Mn owing to one particular asset being reported under Non- Performing Assets.

In order to support the strong growth in the Balance Sheet, operating expenses of the Bank increased to Rs. 771 Mn, reporting a 15% growth YoY, in line with the Bank strategic growth and expansion focus along with its investment in Human Capital development.

The Profit before tax grew by a robust 45% to Rs. 167Mn. An increase of 138% in tax expense was experienced as a result of shifting in the assets from investments in tax-free asset classes to higher yielding taxable interest earning asset classes, which caused an increase in the effective tax rate. Profit after tax for the period was Rs. 95Mn.

Total Assets of the Bank grew to Rs. 101Bn, a 8% growth YTD. Contributing to the same, the Loans and Receivables of the Bank grew to Rs. 61Bn, a 10% growth YTD. Customer Deposits grew by 10% to Rs. 57Bn in the quarter. 

The maintenance of strong capital ratios continues to be a management priority. The Bank’s Total Capital Adequacy Ratio at March 31, 2017 was 21.49% well above regulatory requirements. 

The Group comprising UBC, National Asset Management Ltd and UB Finance Company Limited, recorded a healthy increase in its Net Interest Income by 61% to Rs. 922Mn YoY. Net Fee and Commission Income grew by 94% to Rs. 204Mn YoY. Group Profit after tax for the period was Rs. 120Mn.

Operational Performance 

Continuing on its envisioned growth trajectory, Union Bank focused its strategic investments on expansion and enhancement of banking services in 2017. 

In step with its accelerated growth plans, the Bank continued to implement its focused channel expansion strategy within the first quarter of 2017; reinforcing its presence in strategic localities while strengthening its position as a full—fledged commercial bank. Within the first quarter of 2017, Union Bank relocated two branches in Pettah and Balangoda in a bid to offer a more convenient banking experience to the clients in these regions with enhanced banking services offered at more spacious, ambient locations. Three branches in Negombo, Marawila and Batticaloa were remodeled with a new outlook and an enhanced ambience; in line with the Bank’s strategic focus to deliver a redefined banking experience to its clients. 

Investing further in its reach and expansion initiatives, the Bank extended its ATM network to 121 within the period under review. 

As a result of its intense efforts to expand the Retail lending portfolio, Union Bank marked a milestone achievement, with the Bank’s Personal Loans portfolio crossing the Rs.4Bn threshold as of 31st March 2017. 

Continuing the Bank’s focus on building Current and Savings balances for greater profitability, Union Bank launched a special Avurudu promotion named ‘Union Bank Kalin Avurudu Ganudenu’ in the month of March. Union Bank ‘Kalin Avurudu Ganudenu’, is an early-bird offer of exciting gifts for savings in a bid to encourage customers to save more during the festive season. 

Adding further value to the banking experience for Union Bank account holders, the Bank offered a range of attractive savings and discounts on the Union Bank Visa International Debit Shopping Card in time for the Avurudu season. Union Bank Debit Card offered up to 30% savings at popular shopping and retail outlets during the months of March and April 2017. 

Adding further traction to its existing corporate banking relationships, Union Bank continued to extend its full-fledged cash management solution- Union Bank Biz Direct to leading corporates in the country; becoming the only local bank to be able to provide large scale cash management and payment solutions in the most cost-effective and efficient manner. The Bank hopes to further capitalise on this unique solution, in order to deliver a differentiated banking experience to its existing and potential corporate clients. 

Strengthening the commitment towards its SME clientele, Union Bank hosted existing and potential SME banking clients of the Bank to an evening of networking and fellowship in the first quarter of 2017. The event held in Colombo, was well received by the Bank’s SME clientele. 

Union Bank continued to invest in its employee development and commenced the year 2017 with the launch of SAP Success Factors, an employee performance management system. The state-of-the-art performance management technology is a significant investment made by the Bank in the direction of strengthening the Bank’s performance culture while encouraging staff to aspire for career progression. 

In a bid to further strengthen its position as a responsible corporate citizen, within the first quarter of 2017 Union Bank revived its strategic Corporate Social Responsibility (CSR) policy with a focus on children and youth. The Bank will continue to invest in its focused CSR initiatives for the benefit of the selected segment, within the year 2017 and beyond. 

The Union Bank’s brand was also recognized once again by Brand Finance Lanka as one of the top 100 National brands in the country moving up 6 positions to the 59th position and also reflecting a further improvement in its rating to A- from its previous rating of BB. 

The Bank was once again the first in the industry to release its Annual Report for the year 2016. Union Bank’s Annual Report 2016 was presented in February 2017, under the theme ‘Towards a Bold Leap’ which signifies the Bank’s envisioned growth plan: to achieve a bold leap of success in the coming year. 

Commenting on the Bank’s performance for the first quarter of 2017, Director/Chief Executive Officer of Union Bank, Mr. Indrajit Wickramasinghe stated, “The Bank has successfully withstood a challenging first quarter. With a strong balance sheet, core income and Profit before tax growth, Union Bank will continue to invest and build on this to deliver on its focused business strategy”.

- Union bank

Sri Lanka plans sovereign bond by June; seven lead managers

ECONOMYNEXT - Sri Lanka is planning to launch a sovereign bond by June, armed for which seven lead managers including two Chinese have been appointed, Finance Minister Ravi Karunanayake said.

Citicorp, HSBC, Deutsche Bank, Standard Chartered, Morgan Stanley and two Chinese lenders have been appointed to manage the bond, he said.

Sri Lanka may go to the market by late May armed with a renewed deal with the International Monetary Fund, for which talks are in progress.

Sri Lanka has said it is hoping to raise up to $1.5 billion through the bond sale this year. Minister Karunanayake said Sri Lanka would seek longer-term funding to lengthen the maturity period.

Sri Lanka has earlier sold 5- and 10-year bonds.

A syndicated loan is also in the works, which may net about $900 million to a billion US dollars, where $450 million in core funding has already been committed.

Minister Karunanayake said with sovereign bond proceeds, a syndicated loan, of a Hambantota port deal with China Sri Lanka's foreign reserves may reach $10 billion by the end of the year.

Sri Lankan shares hit near 7-mth closing high on foreign buying

Reuters: Sri Lankan shares closed at a near seven-month high in heavy trading on Thursday as foreign buying for 25 sessions in a row took net inflows into equities to 13.1 billion rupees ($86.1 million) and boosted sentiment.

Foreign investors bought shares worth 810 million rupees on a net basis in the session, bringing the year-to-date net equity inflows to 14.7 billion rupees.

The Colombo stock index gained 0.85 percent at 6,571.65, its highest close since Oct.7.

The index has climbed 10 percent in the 20 sessions through Thursday, having risen for 17 sessions in that period.

It added 2.1 percent last week, marking its fourth week of gains.

"Foreign buying is now spreading to some other counters from John Keells. Foreigners see value in these stocks and local investors have been waiting for investor confidence," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Turnover stood at 1.84 billion rupees, more than double of this year's daily average of 894.2 million rupees.

Market heavyweight John Keells Holdings gained 1.8 percent, while top lender Commercial Bank of Ceylon rose 1.9 percent. 

($1 = 152.1000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Amrutha Gayathri)

Laugfs Wegapitiya keen to up Pan Asia Bank stake after Rs. 507 m buy of 6% stake

Business leader and Laugfs Holdings Chairman W.K.H. Wegapitiya is keen to further increase the stake in Pan Asia Bank Plc, in which he bought a 6% shareholding on Tuesday for Rs. 500 million.

Under his personal account, Wegapitiya acquired 25.36 million Pan Asia Bank shares at Rs. 20 each in a deal worth Rs, 507.2 million.

In total PABC saw 27.38 million shares traded for Rs. 547 million. The seller was longstanding shareholder and former Chairman Nimal Perera who last month broke ranks with PABC’s controlling shareholder and one time partner Nimal Perera.

“The investment in PABC is strategic and we hope to increase the stake gradually,” Wegapitiya told the Daily FT following Tuesday’s purchase which Dhammika Perera too has been supportive. As a practice, Perera offers Board seat to outside investors who take up a sizeable stake in his companies and if Laugfs goes up to the regulator-permitted 10% level, an invitation to serve on PABC Board is likely.

“Given Laugfs Holdings wide range of interests, we can add value to PABC. I see a lot of synergies going forward,” added Wegapitiya.

Laugfs has growing interests in LPG (both here and in the region), retail, industrial/manufacturing, leisure, power and energy, logistics, services, real estate and property.

Wegapitiya said Laugfs has of late been scouting for opportunities in the financial services sector given the synergies as well as the potential to add value. Previously it had a stake in a finance company but exited given the regulatory and operating environment then. In 2014/15 financial year, 86% stake in Laughs Capital Ltd., was sold to Citizen Development Bank and Finance for Rs. 425 million.
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Seylan Bank ups 1Q pre-tax profit by 20% to Rs. 866 m

Seylan Bank made a steady start in 2017 by posting impressive results for Q1 with a Profit After Tax of Rs. 866 million in the backdrop of uncertain market conditions.

The bank increased its Net Interest Income and recorded a robust growth of 20.97% in spite of the mounting pressure on the margins due to rising cost of funds.

However Net Interest Margin contracted from 4.19% in 2016 to 3.92% in 1Q 2017 due to cost of deposits increasing at a faster rate than the re-pricing of loans.

Net fee and commission income witnessed a healthy growth of 24.94% to reach Rs. 869 million in 1Q 2017 as compared to Rs. 695 million for the comparative period. This was mainly attributed from core banking related business such as card-related income, trade finance related fee income and fees from guarantees, remittances, etc. The bank will continue to look towards enhancing its fee-based income from products such as debit and credit cards and trade-related products.

Other operating income comprising net gains from trading, gains from financial investments, gains on foreign exchange and other income reported a net gain of Rs. 299 million compared to loss of Rs. 68 million in 1Q 2016.

Impairment charges for loans and other losses for the period was a charge of Rs. 346 million as compared to a charge of Rs. 84 million in Q1 2016. Individual impairment charges of Rs. 253 million represent specific provisions made for few credit exposures. The bank has a stringent recovery process in place to minimise any significant losses that may arise from such loan facilities.

Total expenses recorded an increase of 19.03% from 2,273 million in the 1Q of the previous year to Rs. 2,705 million during the period under review. Expenses growth was witnessed by investments made in employees, technology, upgrading and refurbishment of branches etc.

Cost efficiency and productivity has taken a predominant role in the bank’s day-to-day operations. The bank continues to focus on cost initiatives coupled with implementation of lean concepts and exploring ways of inculcating a culture of working smarter across all the functions by the employees.

The bank’s loans and advances portfolio recorded a marginal growth of 2.76% to 242,531 million during the 1Q 2017 amidst rising interest rates. The growth in credit was driven primarily by term loans, overdrafts and credit cards.

The overall deposit base recorded a marginal growth of 0.24% from Rs. 273,456 million by the corresponding quarter last year to 274,120 million by 1Q 2017 and a shift from low cost CASA to term deposits was noted which is partly due to increase in interest rates.

As a result the bank’s CASA ratio (Current and Savings) stood at 31.23% and total time deposits increased from 67.48% by end of year 2016 to 68.77% as at 31 March of the total deposits base. An attractive Avurudu campaign were launched for ‘Avurudu Thanpathu’ deposits and Tikiri Account holders to grow the existing balances and acquire new customers.

As a result of the noteworthy financial performance during the first quarter, the bank’s Earnings per Share (EPS) grew by 20.2% to Rs. 2.51. The bank recorded a Return on Average Assets (ROAA) of 1.39% and Return on Equity (ROE) of 12.37%. The bank’s Net Asset Value per share as at 31 March was Rs. 79.74 (Group Rs. 83.12).

Seylan Bank remained soundly capitalised, with the key capital adequacy ratios well above the regulatory minimum requirements and recorded 10.39% as the core capital adequacy ratio and 12.63% as the total capital adequacy ratio.

The bank recognises education as one of the building blocks of the nation and considers it as a priority area for its CSR activities. Under the ‘Seylan Pahasara’ project the bank opened eight libraries during the first quarter which add up to total of 128 libraries in rural areas, especially in under privileged schools with the aim of nurturing young minds and to educate them so that they contribute to the nation’s development.

www.ft.lk