Sri Lanka sovereign bond rated 'B+(EX) by Fitch

ECONOMYNEXT - Fitch Ratings has given a 'B+(EXP)' rating to an international sovereign bond Sri Lanka is currently marketing.

The rating is in line with Sri Lanka's issue default rating of 'B+' with a stable outlook.

Sri Lanka started marketing the bond with a price guidance of around 6.2 percent, Bloomberg Newswires reported.

The full statement is reproduced below:

Fitch Rates Sri Lanka's USD Bond 'B+(EXP)'

Fitch Ratings-Colombo-04 May 2017: Fitch Ratings has assigned Sri Lanka's upcoming US dollar-denominated bonds an expected rating of 'B+(EXP)'.

KEY RATING DRIVERS

The expected rating is in line with Sri Lanka's Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B+' with a Stable Outlook.

RATING SENSITIVITIES

The rating would be sensitive to any changes in Sri Lanka's Long-Term Foreign-Currency IDR. In February 2017,

Fitch affirmed Sri Lanka's Long-Term Foreign-Currency IDR at 'B+' and revised the Outlook to Stable from Negative. The Long-Term Local-Currency IDR is also 'B+' with a Stable Outlook.

Acuity chief Ray Abeywardena, new Sri Lanka CSE chairman

ECONOMYNEXT - Ray Abeywardena, managing director of Acuity Partners (Pvt) Ltd has been appointed chairman of Colombo Stock Exchange from May 05.

Abeywardena has 30 years' experience in stock broking and investment banking, starting as a stock broker at Forbes & Walker Ltd and becoming managing director.

In 2001 he helped set up DFCC Stockbrokers (Pvt) Ltd and was chief executive and managing director.

In 2009 he was appointed Chief Executive of Acuity Partners, when it was set up.

Sri Lanka tourism arrivals up 17.5-pct in April 2017

ECONOMYNEXT - Tourist arrivals to Sri Lanka rose 17.5 percent from a year earlier to 160,249 in April 2017 helped by a surge in European visitors as a partial closure of the airport ended.

Western European visitors rose 40.9 percent with UK visitors up 48.6 percent to 17,841, Germany up 47.1 percent to 11,866 and Switzerland rose 43 percent to 2,691.

From the smaller generating markets of Spain visitors were up 111 percent to 1,810, from Norway up 112 percent to 1,052, from Denmark up 92 percent to 1,310.

Russian visitors rose 12 percent to 4,603 while tourists from Ukraine increased 34 percent to 3,138.

European visitors were sharply up despite the winter tourist season effectively ending, as the airport re-opened during the daytime with runway repairs completed.

Growth in Sri Lanka's larger generating market, India was muted, rising 1.7 percent to 26,323.

Growth from China, which was as high as 80 percent in recent years was also slow at 4.5 percent to 19,823 with a higher base.

In the first four months arrivals rose 6.1 percent to 765,202.

Sri Lankan shares gain; IMF may consider loan review request

Reuters: Sri Lankan shares ended firmer on Thursday, helped by foreign buying in blue chips, after the International Monetary Fund said it may consider the country's request for a second loan review.

The Colombo stock index ended 0.59 percent stronger at 6,602.44, near its one-year closing high hit on Friday, boosted by foreign buying in heavyweights such as John Keells , up 2.1 percent, and Ceylon Tobacco Company, up 1.2 percent.

"With the renewed foreign interest, we can see retail investors are slowly returning to the market. Fundamentally sound stocks moved the market today," said Atchuthan Srirangan, a senior research analyst at First Capital Holdings PLC.

"The positive IMF news also helped boost the market sentiment."

Analysts said the market will continue to be bullish with mild profit-taking.

Turnover stood at 1.08 billion rupees ($7.09 million), more than this year's daily average of 901 million rupees.

Foreign investors net bought shares worth 62.2 million rupees, extending their year-to-date investment in equities to 16.52 billion rupees.

They bought a net 14 billion rupees worth of equities in the last 29 sessions.

($1 = 152.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Sri Lanka launches 10-year sovereign bond

ECONOMYNEXT - Sri Lanka has started selling a 10-year sovereign bond with initial price guidance around 6.625 percent as the country reached agreement with the International Monetary Fund to continue a program.

Bloomberg Newswires said the bond is expected to be finally priced later today.

Marketing of a bond usually starts with Asian markets, and moves to Europe and closes after US markets open later in the day.

Sri Lanka was planning to raise up to 1.5 billion US dollars from international sovereign bonds this year. A minimum deal size of a sovereign bond is 500 million dollars.

The sale is lead managed by Citi, Deutsche Bank, HSBC, JP Morgan, Standard Chartered, China's ICBCI and CITIC CLSA.

Sri Lanka's DFCC bank net up 43-pct in March

ECONOMYNEXT - Profits at Sri Lanka's DFCC group rose 42 percent to 1.36 billion rupees in the March 2017 quarter from a year earlier, helped by higher interest income and sharply lower provisioning interim accounts show.

The group reported earnings of 5.13 rupees per share for the quarter.

Group interest income rose 45 percent to 7.2 billion rupees whole interest expenses kept pace up 46 percent to 4.6 billion rupees, but the bank also grew net interest income 44 percent to 2.59 billion rupees.

Fee income rose 12 percent to 342 billion rupees.

General and specific provisioning fell 63 percent to 167 million rupees.

Asiya Siyaka goes for rubber broking

Asia Siyaka Commodities’ (ASIY) Board of Directors has resolved to commence a rubber broking business which was previously carried out by Siyaka Produce Brokers Ltd.

as a strategic business unit of the company. The move is being made with the view of increasing profitability.

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Overseas Realty records Rs. 881 m 1Q profit

Overseas Realty (Ceylon) PLC recorded a Group Profit after tax of Rs. 881 million for the 1st quarter ended 31March 2017, an increase of 21% over the corresponding period last year.

Revenue of Rs. 504 m was recorded from Property Leasing at the World Trade Center (WTC) Colombo, which is an increase of 6% over the corresponding period last yearand the company expects to maintain good occupancy levels during 2017.

Revenue from Other Services was Rs. 68 m, which is an increase of 8% over the previous period.However, revenue from Apartment Sales is not recognised during this period since the construction of Havelock City Phase 3 has not reached the required completion level.

While construction of Havelock City Phase 3 is currently underway, pilling works for Phase 4 is scheduled to be completed by June 2017. As at the end of the 1st quarter, around 35% ofPhase 3 units have been pre-sold. Piling work of the Havelock City Commercial Development is expected to commence in May 2017.

At the recent AGM held on 24April, the shareholders approved the payment of a first and final dividend of Rs 1.25 per ordinary share. This dividend is paid on the enhanced shares consequent on the Rights Issue and the outflow would be Rs. 1,554 m compared to Rs. 1,265 m paid last year.

The Group Earnings per Share for the period stood at Rs. 0.72.

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NDB ups 1Q pre-tax profit by impressive 50% to Rs. 1.9 b

National Development Bank PLC (NDB) has recorded a Profit after Tax (PAT) of Rs. 1,159 million for the three months ended 31 March 2017, an impressive growth of 45% over the corresponding period of Q1 in 2016.

During the quarter, the total assets of the bank grew up to Rs. 347 billion (4% from December 2016). Loans and receivables to customers recorded a notable growth of Rs. 14 billion (6%) to reach Rs. 241 billion. Customer deposits also achieved an impressive growth of Rs. 24 billion (12%), thereby bringing the total customer deposits to Rs. 228 billion.

Commenting on this impressive first quarter performance, NDB Chief Executive Officer Dimantha Seneviratne stated that such results at the outset of the year are encouraging, and reflects the potential of the bank to record enhanced performance throughout the year.

He attributed the impressive results to the strong teamwork and the firm focus on generating enhanced value from all fronts to all its stakeholders. He also mentioned that the bank’s fresh strategy will place the group on the precise trajectory in becoming a major player within the industry, whilst committing and contributing to the success of its stakeholders and the nation at large.

Improved core banking operations contributed towards the growth in profitability of the bank. Net Interest Income (NII) grew by 18% in Q1 2017 up to Rs. 2,334 million compared to Rs. 1,979 million for Q1 2016, supported by the strong growth in several key asset products coupled with the enhanced net interest margin (NIM) of 2.78% compared to the NIM of 2.64% in 2016.

Net fee and commission income of Rs. 554 million for Q1 2017 grew moderately by 3%. The bank continuously strategises on improving non-fund based income, thereby maintaining an appropriate revenue mix to overcome any unforeseen challenges. Net gains from trading of Rs. 273 million, which comprises of income from foreign exchange, grew by 46% compared to the corresponding period, benefiting from the movement in the exchange rates.

Impairment charges for loans and other losses (Rs. 134 million) saw a reduction of 75% compared to Q1 2016. The higher impairment charge during Q1 2016 was due to one-off specific provisions made for few customers, based on sound judgement and objective evidence.

Operating expenses have been strategically managed. Expenses were up by 10% to Rs. 1,718 million over Rs. 1,568 million for Q1 2016. The increase in costs was mainly attributable to the increase in business volumes, network expansion, increase in Value Added Taxes and the increase in deposit insurance premium cost resulting from the increased customer deposits base of the bank. The bank strives to continuously improve this ratio amidst planned volume and network expansions.

The resultant operating profit before taxed on financial services was Rs. 1,912 million, a marked increase of 50% over Rs. 1,278 million in Q1 2016. Tax on financial services comprising of NBT and VAT increased by 67%. This was partly due to the increase in the VAT rate to 15% from 11% applied for the corresponding period.

Profit attributable to equity holders of the bank (Group PAS) was Rs. 738 million, an impressive 35% growth over Rs. 548 million for Q1 2016.

Total assets of the bank stood at Rs. 347 billion, whilst total assets of the Group stood at Rs. 354 billion as at the end of Q1 2017. Loans and receivables to customers grew by 6% over December 2016 and stood at Rs. 241 billion. This was an increment of Rs. 14 billion which was achieved across all of the business segments of Corporate, Retail and SME.

Customer deposits grew by a notable 12% or by Rs. 24 billion during Q1 2017 to Rs. 228 billion by end Q1 2017. Within deposits, term deposits recorded a relatively higher growth, reflecting the general preference of depositors to place their money in high interest yielding products. The bank is meticulous in adjusting its deposit mix to increase the CASA contribution within the total mix. CASA grew up to Rs. 49.6 billion from Rs. 46.3 billion over the three months period.

Gross Non-Performing Loan (NPL) ratio of the bank for Q1 2017 was 2.87%, whilst the net NPL ratio was 1.56%. The bank’s proactive risk management and recoveries processes ensure that the ratio is well managed.

The bank’s Tier I capital adequacy ratio for Q1 2017 was 9.24% whilst its total capital adequacy ratio was 12.76%. The same ratios for the Group were 11.24% and 14.84% respectively. The ratios are well above the statutory minimum requirements of 5% and 10% for Tier I and Total Capital Ratio respectively. The bank has carried out the necessary ground work to migrate to the BASEL III capital requirement which will come to effect in July 2017.

The bank’s annualised return on average shareholders’ funds (ROE) for Q1 2017 was 13.96% (2016: 13.36%) with an earnings per share (EPS) of Rs. 21.25 (2016: Rs. 19.19).

NDB added one branch to its network during the quarter with the opening of the Katana branch, bringing the total branch network to 105, whilst relocating Kiribathgoda and Wennappuwa branches to more spacious locations for greater customer convenience. The total ATM count was 117, with 12 off-site ATMs. NDB’s reach to the customers comprises of an equitable mix of physical and virtual channels. The bank’s mobile banking app saw a rapid increase in on-boarding during the quarter and is widely commended by the users.

The quarter saw the bank being recognised with five awards. The Global Banking & Finance Magazine of UK recognized NDB with three award titles, namely, the Best Mobile Banking App, the Best SME Bank and the Best Investor Relations Bank 2017 in Sri Lanka. The bank also won awards for Brand Excellence within the Banking & Finance sector and excellence in Social Media Marketing from the CMO Golden Globe Brand Excellence Awards held in Kuala Lumpur, Malaysia recently.

Furthermore, NDB Investment Bank Ltd., the investment banking subsidiary of NDB, was awarded two titles, namely, the Most Trusted Investment Banking Brand – Sri Lanka by the prestigious Global Brands Magazine Awards 2017 and the Best Corporate and Investment Bank – Sri Lanka by the Asiamoney Banking Awards 2017. All these awards are a firm affirmation of the stature that the bank and its Group companies have established in the Sri Lankan banking and capital markets sphere.
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Amana Bank goes for Rs. 4.8 b Rights

Amana Bank (ABL) has announced a 1:1 rights issue amounting to 1.3 billion shares at Rs. 3.8 per share to raise Rs. 4.8 billion.

The net asset value per share of Amana Bank is Rs. 4.63. The proceeds of the issue are to be utilised to raise the core capital of the bank to Rs. 7.5 billion by 30 June 2017 as required by the Central Bank of Sri Lanka and to meet the capital adequacy requirement in line with the growth of the business.

The current stated capital of the bank is Rs. 5.86 billion and post Rights it will increase to Rs. 10.619 billion.

Major shareholders of Amana Bank include Bank Islam Malaysia Berhard (14.4%), AB Bank Ltd., (14.4%), Akbar Brothers (9.98%), Islamic Development Bank (9.62%), Expolanka Holdings Plc (7.22%) and Amana Holdings Ltd. (6.06%). The public holding is 31.3%.

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