London Stock Exchange wins Markets Choice Awards for Best Global Exchange Group

London Stock Exchange Group (LSEG) won the prestigious award for ‘Best Global Exchange Group’ at the fifth annual Markets Choice Awards (MCAs) held in New York on 19 April. Organised by Markets Media and Traders Magazine, the Markets Choice Awards recognise excellence among firms and individuals in financial markets.

Four LSEG businesses were also recognised at the awards: LCH, MTS, MillenniumIT, and London Stock Exchange, for their role in helping the Group distinguish itself amongst its peers.

Today, LSEG is a leading developer and operator of high performance technology solutions, including trading, market surveillance and post trade systems. The Group carries out operations for over 40 organisations and exchanges, including the Group’s own markets with additional services including network connectivity, hosting and quality assurance testing. The Group has a strong footprint in Sri Lanka, employing over 800 staff in highly skilled roles across multiple locations in Colombo and Malabe.

The MCAs aim to identify and recognise the best companies, individuals and innovation in financial markets, spanning institutional trading and investing including buy-side investors, traders and trading desks, sell-side execution desks, exchanges and platforms, traditional technology providers and emerging fintech firms. A thorough selection methodology is carried out in order to identify nominees and winners, and the MCA Advisory Board maintains its focus on the opinions of market participants.

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HNB sustains ‘superior performance’ in Q1 2017

HNB continued its growth during the first quarter of 2017 with Group PAT growing by 16.4% yoy to surpass Rs 4 Bn while Bank PAT grew by 18.1% yoy to be recorded at Rs 3.65 Bn.

Growth in advances coupled with the rise in interest rates enabled interest income growth in excess of 45% yoy to Rs 22.6 Bn. While interest expenses were also higher on account of funds moving into higher yielding deposits, the Bank’s substantial CASA base of Rs 228 Bn cushioned the impact on interest costs partly. As a result, the Net Interest income grew by 25.9% to Rs 9.3 Bn during the first quarter of 2017.

Net fee and commission income also performed well, supplementing core banking performance with a contribution of approximately Rs 2 Bn which is a 15.9% growth from Q1 2016. Credit Cards, Trade Finance and Current Account services contributed strongly towards the growth.

The Bank’s asset quality remained strong with the NPA ratio being at 1.85% as at the end of the first quarter of 2017, compared to the industry average of 2.7%. The provision coverage of the Bank improved from 73.4% in Q1 2016 to 79.5% in March 2017.

Operational excellence initiatives continued to yield transformational benefits for the Bank which improved its cost to income ratio by 372 bps yoy to 41.9%. Operating profits before VAT and Taxes grew by 22.1% yoy to Rs 6.35 Bn. Charges for VAT and NBT increased by 52.5% as a direct result of the revision in the rate of VAT from 11% to 15%. Subsequently the Bank’s PBT grew by 16.5% to Rs 5.1 Bn. The PAT of Rs 3.65 Bn represented a ROA of 1.7% and a ROE of 18.8%.

The Bank also reported efficient balance sheet growth, boosting its asset base by 18.7% yoy to surpass Rs 900 Bn in total assets. The Bank’s deposit base increased by Rs 107.9 Bn over the 12 month period to March 2017, to finance the Rs 101 Bn growth in advances during the same period.

Commenting on the first quarter performance MD/CEO of HNB Jonathan Alles stated that "We are pleased to have begun the year on a strong note and carried on in the same vein from where we ended 2016. The first quarter of 2017 saw us further strengthening our presence in the digital space. Following the implementation of our payment and cash management and distributor financing solutions last year, we opened a few digital branches during 2017. We will forge ahead with our investments in technology while maintaining our focus on service and operational excellence." Alles further added that "The dedication and commitment of our competent team has been the cornerstone of our success. As such we will continue to drive the best and most employee centric corporate culture at HNB, which we consider to be of paramount importance". - HNB

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‘Bank of Ceylon continues to dominate as No. 1 Brand for 9th consecutive year’

The Sri Lankan partner of Brand Finance UK which is a leading body which has a global network in 17 countries, Brand Finance Lanka revealed BOC brand as the No.1 Brand with the value as Rs.40. Billion. Empowering Sri Lankans to realize their life goals through affordable yet best-in-class banking solutions, in its steadfast journey of over 77 years, the Bank of Ceylon has always gone that extra mile to add value to Sri Lankan banking industry.

With the pledge to commit as "Banker’s to the Nation" since its inception the Bank has been evolving with the needs and lifestyle of the Sri Lankan community to provide the financial assistance they require. The first and the only Sri Lankan single business entity to earn PBT of Rs.25.3 Billion for 2015 and PBT 31.2 Billion for 2016, BOC challenged its own record continuing its quest to strive for exceptional performance in all areas of banking. Two very significant achievements of BOC in recent history were the surpassing Rs. One Trillion in Deposits in 2015 and Rs. One Trillion advances in 2016. The Bank’s asset value now exceeds Rs. 1.6 Trillion and is the highest asset base owned by a single business entity in the country.

"Maintaining our position as the No.1 Brand in the country is an achievement like no other. Anyone would agree with me that being the No.1 Brand in the country for the 9th consecutive year is an unmatchable achievement. We have done exceptionally well during past years and now we are the only Bank that has three Trillions in the balance sheet. Our next goal is to enhance the Bank’s asset base up to Rs. 2 trillion by 2019-this will surely be another milestone in the Sri Lankan banking industry", the Bank’s chairman, President’s Counsel Ronald C. Perera stated. In its steadfast journey brand ‘BOC’ has been able to overcome significant macro and micro environmental changes in the banking and financial industry to establish itself as a superior brand in the country. With the time tested vision as "Banker’s to the Nation", Brand BOC has delivered the best result for its true stakeholder, citizens and the Government of Sri Lanka.

BOC has earned the trust of Sri Lankans and proudly caters to over 12 Million customers today. With its massive financial capacity and adaptable approach that comes with inherent commitment towards country’s social and economic development BOC has enabled banking services successfully to a very diverse base customer base from individuals to businesses and organizations of different geographic and economic strata. BOC offers the flexibility and convenience of a whole gamut of banking services under one roof for everyone from newborn to senior citizen and Micro entrepreneur to corporate business. In order to cater to this geographically diverse customer base, the bank has 625 branch network that is spread at every nook and corner and owns the largest ATM/ CDM network in Sri Lanka with over 825 machines serving customers 24 hours 365 days. BOC was the first Sri Lankan bank to have marked its presence overseas with the opening of "BOC London" in 1949 at the epicenter of international banking at that time. Later BOC spread its foreign branch network to Chennai, Male and Seychelles. Apart from its own foreign branch network BOC maintains foreign correspondent banking network with over 860 foreign banks and exchange houses. - BoC

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Seylan Bank raises long term funding of US$ 75 mn

Seylan Bank, achieved a historic milestone in its banking history by successfully securing a long term funding facility of USD 75 million from five separate financial institutions.

The amount has been raised through three Development Finance Institutions (DFIs) in Europe, a European based Investment Fund and a Regional Bank in the United Arab Emirates (UAE).

The funds will be utilized for general business development and improvement of Small and Medium Enterprises in Sri Lanka. “This is a significant moment for the Bank. It is the first time that we have partnered with three globally recognized and respected DFIs, an Investment Fund and a Regional Bank. Our partners have pledged commitment to support our loan growth and vision, with a specialized focus on the growth of Small and Medium Enterprises in Sri Lanka.

This transaction is also significant as we have been able to secure five-year USD funding for this purpose,” said Ramesh Jayasekara, Chief Risk Officer of Seylan Bank.

The transaction entailed raising funds from five separate counterparts with USD 15 million provided by the National Bank of Ras Al Khaimah (‘RAK BANK’) of UAE. A second long term facility of USD 15 million was provided by Symbiotics – a Switzerland-based investment fund dedicated to providing inclusive and sustainable finance to small and medium enterprises in emerging markets.

The final term facility of USD 45 million was provided by three European Development Financial Institutions – Deutsche Investitionsund Entwicklungsgesellschaft mbH (DEG), Germany, OeEB – the Development Bank of Austria (OeEB) and OPEC Fund for International Development (OFID) of Austria. These funds were raised in order to improve Small & Medium Enterprises lending. “The USD 75 million raised in long term facilities through financial institutions in Europe and Middle East also reflects strong confidence in Seylan Bank’s operations and its future growth potential,” added Jayasekara.

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Sri Lanka’s Keells Food profits down on processed food concerns, taxes

ECONOMYNEXT– Sri Lanka's Keells Food Products reported lower profits for the March 2017 quarter and financial year, with sales stagnant due to lower demand stemming from concerns over processed food and higher taxes.

Net profit for the March 2017 quarter fell 31 percent to 48 million Rupees from a year ago, with sales down one percent to 717 million Rupees, according to interim accounts filed with the stock exchange.

Quarter earnings per share of the firm, a unit of John Keells Holdings group, fell to 1.90 Rupees from 2.77 Rupees during the period.

Keells Food, which makes processed meats, said EPS for the year ending 31 March 2017 fell to 10.80 Rupees from 13.13 Rupees the previous year, with net profit down 18 percent to 275 million Rupees and sales stagnant at 3 billion Rupees.

Keells Food told shareholders in its annual report that the decline was because of the fall in demand “stemming from negative campaigns on processed food consumption and reduced consumer purchasing power following increased taxes and adverse exchange rate impacts during the year.”

Sri Lanka's Commercial Bank March net profit up 17-pct

ECONOMYNEXT– Sri Lanka's Commercial Bank said March 2017 quarter group net profit rose 17.1 percent to 3.8 billion Rupees from a year ago, but the increased cost of funds had reduced margins.

Interest income rose 31 percent to 23.7 billion Rupees, while interest expenses rose faster, at 51 percent to 15 billion Rupees, at bank level.

Net interest income was up 6.8 percent to 8.7 billion Rupees over the period, according to interim accounts filed with the stock exchange.

“The bank reported profit of 6.341 billion Rupees before value-added tax and nation building tax, reflecting growth of 17.93 percent in the first quarter of 2016,” a statement said.

VAT and NBT for the three months reviewed increased 40.33 percent to 1.119 billion Rupees due to an increase in the VAT rate and higher profits earned during the period under review, it said.

“Consequently, profit before income tax for the quarter grew by at a lower percentage of 14.03 percent to 5.222 billion Rupees, while profit after tax is at 3.775 billion Rupees, increasing by 16.73 percent.”

The statement said that overall, the bank paid Rs 2.565 billion in taxes for the three months under review, an increase of 19.73% over the corresponding quarter of the previous year, which, coupled with the increased cost of funds this year, resulted in shrinking margins.

“We have learned to live with the reality of reduced margins and higher taxes, through our strong focus on operational excellence which continues to boost business volumes,” Commercial Bank Chairman Dharma Dheerasinghe said.

“The bank’s momentum in mobilising funds and lending has not slowed, even though the dynamics that apply to these areas are changing.”

Commercial Bank Managing Director Jegan Durairatnam said that although the bank’s Current and Savings Account (CASA) base had remained almost at the same levels, the new deposits mobilised cost significantly higher than those mobilised in the corresponding quarter of 2016.

“The ability of the bank to maintain its growth in this scenario reaffirms the emphasis we place on holistic management of our core business areas,” he said.

Sri Lankan shares slip; investors await clarity on tax

Reuters: Sri Lankan shares ended marginally lower on Monday, slipping from a near one-year high hit last week, as investors waited for some clarity after the finance ministry said a new tax structure is being considered under reforms.

Finance Minister Ravi Karunanayake on Sunday said a new tax revenue proposal, which has yet to be approved by the parliament, would further increase government coffers in the coming years.

However, the new tax system which is urged by the International Monetary Fund, could face some amendments when it goes through parliament approval process, analysts say.

"The market will wait for the confirmation. When you see the history, there has been a lot of reversal. So investors will wait until they see the final numbers," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

The Colombo stock index ended 0.18 percent lower at 6,659.87, slipping form its highest close since May 18, 2016 hit on Friday. The index added 0.5 percent last week, its seventh straight weekly gain.

Turnover stood at 465.4 million rupees ($3.05 million), half of this year's daily average of 886 million rupees.

Foreign investors net sold shares worth 10.1 million rupees, marking the first net outflow in seven session. They have been net buyers of 16.8 billion rupees worth of equities so far this year.

Reduction of 36-38 basis points in T-bill yields in the last three weeks, stable currency on expectation of inflows from foreign borrowing, and an IMF statement on the disbursement of the third tranche of a $1.5 billion loan, have helped boost sentiment, analysts said.,,

Shares in Melstacorp Plc fell 2.3 percent while, Hatton National bank Plc fell 0.7 percent and Sri Lanka Telecom Plc fell 1.2 percent. 

($1 = 152.4000 Sri Lankan rupees) 

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