Sri Lankan stocks steady in dull trade; political woes weigh

Reuters: Sri Lankan shares ended steady on Monday in thin trade amid political uncertainty after both parties in the ruling coalition suffered defeats in a local election earlier this month.

Turnover stood at 288.4 million rupees ($1.9 million), well below the daily average of 849.7 million rupees.

The Colombo stock index ended 0.03 percent firmer at 6,565.63, its highest close since Feb. 9.

Shares in Melstacorp Ltd rose 7 percent, while Trade Finance Plc gained 16.8 percent.

The index fell 0.13 percent last week, after gaining for three straight weeks.

“Very slow day as investors are waiting for political direction after the election debacle,” said Dimantha Mathew, head of research at First Capital Holdings.

Prime Minister Ranil Wickremesinghe’s centre-right United National Party (UNP) and President Maithripala Sirisena’s centre-left Sri Lanka Freedom Party (SLFP) were routed by a party backed by former President Mahinda Rajapaksa in local polls on Feb. 10, plunging the government into crisis.

Since the results, both parties have locked horns on how best to continue in the government. Sirisena’s party wants to form its own government, his party ministers have said, while Wickremesinghe’s party has said it is in the process of forming its own government.

Wickremesinghe, addressing the media on Friday said that the government will continue with a reshuffle of the cabinet.

Foreign investors bought a net 20.7 million rupees worth of shares on Monday, extending the net foreign buying to 5.5 billion rupees worth of equities so far this year. 

($1 = 155.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Amrutha Gayathri)

Janashakthi posts Rs.13, 759 mn income for 9 months ending Dec 31

Janashakthi PLC group posted a total income of Rs.13, 759 million for the nine months ended December 31, 2017 which is an increase when compared to Rs. 12,922 million in the corresponding period of the previous year.

Chief Executive Officer Ramesh Schaffter said this represents an increase of 6.4% year on year. Group loss after tax was Rs. 515 million against the Rs. 334 million profit recorded for the corresponding period of the previous year.

The asset base of the group stood at Rs. 57 billion, Janashakthi PLC reported a total income of Rs. 162 million for the 06 months ended December 31, 2017, compared to 146 million in the previous year.

The company’s main subsidiary, Janashakthi Insurance PLC reported a consolidated profit after tax of Rs. 507 million for the nine months ended September 30, 2017 when compared to Rs. 789 million for the nine months ended September 30, 2016.

Profitability was adversely affected by high claims in both the fire and engineering and the medical segment during the period under review. At 30 September 2017, the Janashakthi Insurance PLC had an asset base of Rs. 35.7 billion with a market capitalization of Rs. 8.1 billion.

The prudent management of investments by Janashakthi Insurance PLC helped increase the investment income by Rs. 441 million which is a remarkable increase of 32% over the previous year.

This was the mainstay for the increase in Other Revenue which reached Rs. 2,241 million, an increase of Rs. 515 million over the same period last year. The company recorded a total income of Rs. 2.58 billion for the 09 months ended 31 December 2017 when compared to Rs. 2.41 billion in the corresponding period of the previous year. This represents an increase of 7% year on year. 

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Ceylinco General Insurance records premium income of Rs. 18 bn

Ceylinco General Insurance Ltd., announced excellent results for the financial year ended December 31, 2017, recording yet another exceptional year.

Ajith Gunawardena, Chief Executive Officer of Ceylinco General Insurance, said: “During 2017, the company recorded a premium income of Rs 18 billion (Rs 17,977 million), with an impressive growth of 11.5%, which signifies an increase of Rs. 1.9 billion over the previous year. When considering the stiff competition that exists in the market, last year’s performance was outstanding. Despite the price undercutting practiced by some players, customers have understood the value of Ceylinco VIP on the Spot.”

“We believe in providing a superior service to our customers and our differentiation is not on price but on our exemplary claim settlement and the value we add to our products and services. We have worked hard together and surpassed expectations and our own benchmarks. We remain committed in exercising disciplined control and maintaining far-sighted leadership.”

Elaborating further on the remarkable figures, Patrick Alwis, Managing Director of Ceylinco General Insurance Ltd, said, “Ceylinco General Insurance paid claims amounting to Rs 9 billion (Rs. 8,967 million) during 2017, settling all genuine claims within 24 hours. This includes the large number of flood and cyclone claims that were paid within a period of 14 days, enabling customers to return to normalcy in the fastest possible time. We are the only company to do so.”
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Softlogic Holdings to raise over Rs.7 billion

Softlogic Holdings PLC is to raise over Rs.7 billion for the purpose of restructuring the balance sheet and improving key capital ratios by way of a private placement, rights issue and internal restructuring. said its Chairman, Ashok Pathirage.

“Going forward this exercise would no doubt reduce finance cost and significantly impact our credit rating,” he added.

Commenting on their interim results for period ending December 31, 2017 he said that for a consumer-retail-focused conglomerate such as Softlogic, a challenging operating climate was witnessed during the period. “This was especially evident in the retail sector, which was further compounded by the high interest rate regime, the rising inflation levels, the inclement weather and the VAT increase.”

Despite these systemic challenges, Group revenue grew 10.3% to Rs.49.4 billion during the first nine months of this financial year while the quarterly revenue grew 17.7% to Rs. 18.3 billion. (bn)

Cumulative Group top-line witnessed a contribution of 31.8% from the retail sector followed by ICT (26.3%), healthcare services (18.2%), financial services (16.3%) and leisure (3.5%). gross profit increased 22.5% to Rs. 17.6 bn during the 1-3Q-FY18 reflecting strong GP margin improvement from 32.1% in 1- 3QFY17 to 35.7% in 1-3QFY18.

The quarter too registered GP margin improvements from 33.3% in 3QFY17 to 35.3% in 3QFY18 pushing the quarterly gross profit to Rs. 6.5 bn (up 24.9%).

Distribution and administrative expenses increased 10.8% and 14.4% to Rs. 2.5 bn and Rs.9.8 bn respectively during the period resulting in the total operational expenses, which now includes Movenpick Hotel Colombo, to increase to Rs. 12.3 bn (up 13.6%) while maintaining the operating cost margins at 24% levels during 1-3QFY18.

Quarterly operational cost increase remained moderate at 8.8% to Rs. 4.3 bn Other operating income for the period was to Rs. 1.9 billion (Rs. 741.5 mn in 1-3QFY17).

Cumulative operating profit improved 67.2% to Rs. 7.2 bn while the quarter registered 124.3% increase to Rs. 3.1 bn

Finance Income which primarily consists Softlogic Life Insurance PLC’s investment portfolio’s performance, increased 52.6% to Rs. 879.5 million during the nine-month period while the quarter registered 87.9% growth to Rs. 308.2 million.

“We are awaiting the launch of Asiri Hospital Kandy, which would be the first state-of-theart 190-bed hospital to cater to the Central, North and Eastern provinces. This facility will include state-of-the-art technology specializing in cardiac, some of which will certainly be a first for the region.

“Odel will take 100,000 sq.ft of mall space in Shangri La which is expected to open in June 2019 and plans are progressing well to unveil one of the city’s authentic malls The Odel Mall in 2020.”
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Fitch rates ComBank’s Basel III sub debt ‘AA-(lka)(EXP)’

Fitch Ratings has assigned Commercial Bank of Ceylon PLC’s (CB, AA(lka)/Stable) proposed Basel III-compliant subordinated unsecured debentures of up to Rs.10 billion an expected National Long-Term Rating of ‘AA-(lka)(EXP)’.

The debentures will have maturities of five and 10 years and carry fixed coupons. The debentures will qualify as Basel III-compliant regulatory Tier-two capital for the bank and include a non-viability clause whereby they would convert to ordinary shares if so determined by the Monetary Board of Sri Lanka.

The debentures will be listed on the Colombo Stock Exchange.

The bank plans to use the proceeds to strengthen its Tier-two capital base and support its loan book expansion.

The final rating is subject to the receipt of final documentation conforming to information already received.

Fitch rates the proposed Basel III Tier-two notes one notch below the bank’s National Long-Term Rating of ‘AA(lka)’.

This reflects the notes’ higher loss-severity risks compared with senior unsecured instruments due to the notes’ subordinated status.

CB’s National Long-Term Rating is used as the anchor rating because the rating reflects the bank’s standalone financial strength.

Fitch believes the bank’s standalone credit profile best indicates the risk of becoming non-viable.

Fitch has not differentiated the notching on the proposed notes from the notching on CB’s legacy Tier-two notes as it is assumed that the authorities would step in late, moving the point of non-viability close to liquidation.

Fitch has not applied additional notching to the notes for non-performance risk according to our criteria, as the notes have no going-concern loss-absorption features. CB’s ratings reflect its modest risk appetite, strong funding profile, solid franchise and stable performance.

www.dailymirror.lk

Insurance Industry records 15.5-pct growth in 3Q of 2017

LBO - Sri Lanka’s insurance industry was able to report a growth of 15.53 percent (3Q, 2016: 16.97 percent ) in terms of overall Gross Written Premium (GWP), at the end of third quarter of 2017, recording an increase of 15,862 million rupees when compared to the same period in 2016.

The GWP for Long Term Insurance and General Insurance Businesses for the nine months ended September 30, 2017 was 118,016 million rupees compared with the same period in 2016 amounting to 102,155 million rupees.

The GWP of Long Term Insurance Business amounted to 51,893 million rupees (3Q, 2016: Rs. 46,540 million) while the GWP of General Insurance Business amounted to 66,123 million rupees (3Q, 2016: Rs. 55,615million). Thus, Long Term Insurance Business and General Insurance Business witnessed a GWP growth of 11.50% and 18.89% respectively, when compared to the corresponding period of 2016.

The value of total assets of insurance companies has increased to Rs 548,361million as at September 30, 2017, when compared to Rs 497,868 million recorded as at September 30, 2016, reflecting a growth of 10.14% (3Q, 2016: 13.41%). The assets of Long Term Insurance Business amounted to Rs. 387,461 million (3Q, 2016: Rs 342,072 million) indicating a growth rate of 13.27% year-on-year. The assets of General Insurance Business amounted to Rs160,900 million (3Q, 2016: Rs 155,796 million) depicting a growth rate of 3.28%.

The investment in Government Securities for the period of nine months amounted to Rs 181,791 million representing 46.92% (3Q, 2016: Rs162,084;47.38%) of the total assets of Long Term Insurance Business, while such investment of the total assets of General Insurance Business amounted to Rs. 29,598 million representing 18.40% (3Q, 2016: Rs. 33,503;21.50%). Accordingly, the total investment of both Long Term Insurance Business and General Insurance Business in Government Securities amounted to Rs 211,389 million (3Q, 2016: Rs. 195,587million). Thus, the investment in Government Securities of Long Term Insurance Business has increased by 12.16% and the investment in Government Securities of General Insurance Business has declined by 11.66%.

The profit (before tax) of insurance companies in both Long Term Insurance Business and General Insurance Business for the nine months ended September 30, 2017amounted to Rs. 10,854 million (Q3, 2016: Rs. 14,721 million) showing a decline in profit by 26.27%.

The profit (before tax) of Long Term Insurance Business amounted to Rs. 5,110 million (3Q, 2016: Rs. 5,159 million) while the profit (before tax) of General Insurance Business amounted to Rs. 5,743 million (3Q, 2016: Rs. 9,562 million).

Thus, profit (before tax) of General Insurance Business showed a significant decrease of Rs. 3,819 million (39.94%) when compared to the period ended September 30, 2016.

This is mainly due to receipt of significant dividend income of an insurer during the year 2016. However, there was no significant declaration of dividend income for the period ended September 30, 2017. Apart from the General Insurance Business, no material deviation noted in respect of the profit (before tax) of Long Term Insurance Business for the period ended September 30, 2017.

Out of 27 Insurance Companies (Insurers) in operation as at September 30, 2017, 12 are engaged in Long Term (Life) Insurance Business,13 companies are carrying out only General Insurance Business and two are composite companies (dealing in both Long Term and General Insurance Businesses).

Sixty insurance brokering companies, registered with the Board as at September 30 2017, mainly concentrate in General Insurance Business. Total Assets of insurance brokering companies as at September 30, 2017 have increased to Rs. 4,148million when compared to Rs. 3,961millionrecorded as at September 30, 2016, reflecting a growth of 4.70% year-on-year.