Sri Lankan shares fall; turnover hits over 6-wk high

Reuters: Sri Lankan shares edged down on Monday as losses led by consumer discretionary stocks outpaced gains in financials, with foreign investors boosting market turnover to a more than six-week high.

The Colombo stock index closed 0.09 percent lower at 6,607.14, further moving away from its highest close since July 31 hit last Thursday.

Top lender Commercial Bank of Ceylon Plc, which accounted for 55.5 percent of the day’s turnover, gained 2.4 percent. Losses were, however, led by Ceylon Tobacco Company Plc , which fell 2.5 percent and dragged down the index.

“We see some fresh foreign buying in Commercial Bank . There was a lot of foreign interest,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

Foreign investors net bought shares worth 136.5 million rupees ($888,961), extending the net inflow to 19.8 billion worth equities so far this year.

Foreign investor purchases accounted for 85.4 percent of the day’s total turnover of 2.53 billion rupees ($16.48 million), which was around three times this year’s average daily turnover of 943.4 million rupees.

The day’s turnover was the highest since Sept. 15, exchange data showed.

“We do not see any major factors that would bring the market down in the next two months. The market also expects the interest rates to come down further and local investors are waiting for this,” Gani said.

Local investors were looking for direction from corporate results for the September quarter and the 2018 budget, which Finance Minister Mangala Samaraweera will present on Nov. 9.

($1 = 153.5500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka Tea Smallholder Factories Sept net up 60-pct

ECONOMYNEXT - Tea Smallholder Factories, which makes black tea from leaves bought from Sri Lankan small farmers, said net profit rose 60% to Rs10.8 million from a year ago

Sales rose 24% to Rs713 million, according to interim accounts filed with the stock exchange.

The company, in which John Keells Holdings has a 37.62 percent stake, reported earnings per share of 36 cents in the September quarter compared with 23 cents the year before.

EPS for the six months to September 2017 was Rs1.51 with net profit up 221% to Rs45 million and sales up 25% to Rs1.3 billion.

The accounts showed Tea Smallholder Factories profits improved sharply in the southern Galle low country district and in the hill country Nuwara Eliya district.

Losses were reduced in southern Matara. In the Ratnapura district its profits grew significantly although being much smaller than in other districts.

The other two main shareholders of the firm are Akbar Brothers Limited with 24.39 percent and Central Finance Company with 22.85 percent.

Pan Asia Bank 3Q profit flat over higher credit cost, slowdown in new loans

Pan Asia Banking Corporation PLC recorded modest performance during its third quarter as well as for the first 9 months amid challenging macro economic factors including higher interest rates, slowdown in demand for new loans and increase in provisions for possible bad loans.

The interim results released to the Colombo Stock Exchange showed for the quarter ended in September 30, the bank reporting earnings of Rs.301.3 million or 2.87 a share, largely unchanged from a year earlier. 

Meanwhile for the 9 months the bank posted Rs.918.1 million in after-tax profit or Rs.2.91 a share in comparison to the Rs.905.8 million reported for the corresponding period in 2016.

The other income led by fees and commissions cushioning much of the earnings as the core banking performance moderated amid rising cost of funds and relatively slow demand for new loans.

The net interest income for the 9 months rose by 8.0 percent to Rs.3.67 billion from a year earlier as the rise in interest cost beat the rise in interest income.

The net interest margin was tad weaker at 3.81 percent against 3.87 percent at the beginning of the year, albeit remaining above the industry average.

The bank gave Rs.4.8 billion in new loans and receivables during the period nudging the bank’s total loans and receivables book to surpass Rs.100 billion to end the period with a total book of Rs. 103.3 billion.

However, the provisions made for possible bad loans rose substantially during both the quarter as well as in the 9 months. During the 9 months the general provisions rose to Rs.390.1 million from Rs.261.9 million a year earlier while the specific provisions rose to Rs.178.7 million from Rs.18.6 million.

The growth in loans almost corresponded with the rise in deposits as the new deposits too rose by Rs.4.1 billion.

The bank’s total deposits which was at Rs.95.63 billion by the end of September is now flirting the Rs.100 billion mark, another key milestone for the bank which is within the reach of the bank before the end of the financial year.

In March 2017, the bank raised Rs.2.1 billion fresh equity via a rights issue placing the bank’s capital adequacy requirements well above the minimum requirements under the new BASEL III rules.

As of September end, the bank’s both Common Equity Tier I (CET I) and the Tier I was 10.56 percent against the regulatory minimums of 5.75 percent and 7.25 percent respectively.

Meanwhile, the total capital adequacy ratio or the Tier II ratio was 13.1 percent whereas the minimum required is 11.25 percent.

Speaking on the performance, Pan Asia Bank Director/ Chief Executive Nimal Tillekeratne gave a more sanguine outlook for the bank albeit the recent modest performance, as the bank is currently reviewing its strategies and consolidating almost all areas of the bank, which is expected to yield stronger results.

“I consider this year as well as the next as‘re-set’years, which will lay a stronger foundation for a sustainable and a durable growth in the medium to long-term”, Tillekeratne said.

The bank is currently undergoing an overhaul in areas such as credit underwriting, risk management, operations, information technology, human resources and its network expansion strategy under Tillekeratne’s fresh leadership.
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