Sri Lanka Nestlé unit December quarter net up 37-pct

ECONOMYNEXT – Nestlé Lanka said net profits rose 37% to Rs1.18 billion in the December 2017 quarter from a year ago although annual profit fell as a severe drought and floods dampened consumer demand amid higher costs.

The Sri Lankan unit of Swiss food and beverage multinational said December 2017 quarter sales rose 16% to Rs9.98 billion. Quarterly earnings per share were Rs21.94. The stock was last traded Thursday at Rs1,850.

In the year to 31 December 2017, EPS was Rs67.64 with net profit down 17% to Rs3.6 billion while sales rose 3% to Rs37.6 billion from the previous year.

Severe drought, floods, sluggish market conditions and increased taxes impacted the annual results, Nestlé Lanka said in a statement.

“The FMCG market has been adversely impacted this year due to sluggish consumer demand and rising cost pressures,” said Shivani Hegde, Nestlé Lanka Managing Director.

Growth was further eroded by an increase in Value Added Tax, which coupled with unprecedented increase in coconut prices, had a negative impact on profit, the statement said.

“Enhanced cost saving measures and a focus on driving efficiencies across the value chain helped in partly mitigating these impacts.”

Nestlé Lanka said it has ongoing product renovations to reduce sugar, salt and fat, and increase micronutrients like iron, vitamin A and calcium in its products.

Sri Lanka’s DIMO buys control of seed, fertiliser firms

ECONOMYNEXT – Sri Lanka’s Diesel & Motor Engineering said it has acquired control of two companies which import and distribute agricultural inputs like chemicals, fertilisers and seeds.

A stock exchange filing said it invested Rs345.5 million to take 51% stakes in the privately-owned Plantchem (Private) Limited and Plant Seeds Private Limited.

The two firms are engaged in the import, processing and distribution of agri inputs like crop protection products, specialised fertilisers and seeds, it said.

DIMO, best known for importing luxury Mercedes-Benz cars and also selling Tata vehicles, has diversified in to other activities including agricultural machinery and crops and fertiliser.

Sri Lanka’s Com Bank December net up 12-pct to Rs4.8bn

ECONOMYNEXT – Sri Lanka’s Commercial Bank said net profit rose 12% to Rs4.8 billion in the December 2017 quarter from a year ago.

Interest income rose 21% to Rs27.6 billion while interest expenses rose 19% to Rs16.7 billion with net interest income up 26% to Rs10.9 billion, according to interim results filed with the stock exchange.

Quarterly diluted earnings per share were Rs5.05, up from Rs4.70 a year ago. Commercial Bank shares closed at Rs139 Friday.

Commercial Bank announced a scrip dividend after close of trading of one share for 77.78 voting shares and one for 58.9 non-voting shares.

In the year to 31 December 2017, diluted EPS was Rs17.27 with net profit up 14% to Rs16.6 billion.

December quarter net fee and commission income rose 13% to Rs2.6 billion while trading losses fell 67% to Rs117 million

The quarterly accounts showed impairment charges for bad loans of Rs607 million against a reversal of Rs237 million the previous year

Commercial Bank said in a statement that the 28% growth in annual interest income to Rs103 billion, up Rs22.3 billion, was “primarily due to a significant growth in the bank’s loan book over the 12 months.”

Commercial Bank chairman Dharma Dheerasinghe said the bank paid out about 41% of its profits as taxes in addition to over Rs2 billion it had collected from customers on behalf of the government in 2017.

Managing Director Jegan Durairatnam said a further improvement in asset quality with both gross and net non-performing loans ratios decreasing, boosted profitability.

Total assets of the bank grew by Rs131 billion or 12.96 % at a monthly average of Rs 11 billion to Rs 1.143 trillion as at 31st December 2017, the statement said.

Net loans and receivables increased by Rs 121.428 billion or 19.71% in 2017 to stand at Rs 737.4 billion at the end of the year, with an average increase of more than Rs 10 billion per month.

“This was the third successive time that Commercial Bank increased its loan book by more than Rs 100 billion in a year.”

The bank’s deposits portfolio grew 14.95% or Rs 110.6 billion to Rs 850 billion as at 31st December 2017, the second successive year in which deposits grew by more than Rs 100 billion.

Commercial Bank said it improved net interest income by 18.89% to Rs 39.023 billion, more than double the rate of growth achieved in 2016, despite interest expenses growing by 33.59% to Rs 64.011 billion due to rising interest rates and a continuing shift of low cost funds to fixed deposits in 2017.

Total impairment charges for loans and other losses were increased by 25.13% to Rs 1.914 billion mainly due to the collective impairment provisions required on the growth of the loan book in 2017.

Ceylinco Life’s net profit surges 95% to Rs. 6 bn

Ceylinco Life has posted a net profit of Rs. 6 billion for the year ending December 2017 while reaffirming its market leadership in Sri Lanka’s life insurance industry for the 14th successive year, with premium income of Rs 15.7 billion.

The company posted a pre-tax profit of Rs 6.3 billion, up by 70 per cent while net profit growth was even higher, at 95 per cent.

Total income, comprising of premium income and investment and other income, grew to Rs. 25.6 billion, the company said in a media release.

Investment and other income improved by 17 per cent to Rs. 10.3 billion in the 12 months reviewed, reflecting the success of the investment strategies deployed by the company. Ceylinco Life’s investment portfolio grew by 10.8 per cent to Rs 89.5 billion as at 31st December 2017.

“These figures once again demonstrate the importance of concentrating on the core elements of the business: selling the most appropriate and effective life insurance products, and prudent management of investments in the interest of all stakeholders,” Ceylinco Life Managing Director/CEO R. Renganathan said.

Ceylinco Life Director/Deputy CEO Thushara Ranasinghe said: “Our policyholders know that profit is not the sole objective of the company. Ceylinco Life has the most generous policyholder rewards programme in the industry and our commitments to community welfare are substantial and long term. In that context, our financial performance assumes even greater significance, because it is not detrimental to any stakeholders.”

Ceylinco General 2017 premium income up at Rs. 18 bn

Sri Lanka’s insurance giant, Ceylinco General Insurance Ltd., announced excellent results for the financial year ending December 2017, reporting a 11.5 per cent growth in premium income to Rs. 18 billion. In a company media release, Ajith Gunawardena, CEO of Ceylinco General Insurance, announcing the results, said: “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.” Patrick Alwis, Managing Director of Ceylinco General Insurance Ltd, noted: “Ceylinco General Insurance paid claims amounting to Rs. 9 billion 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.” In a landmark move, in August 2017, Ceylinco General Insurance announced a Rs. 1 million cover that reimburses medical costs incurred in the treatment of heart disease, cancer, kidney failure, stroke and several other serious illnesses including heart attack and open heart surgery, major organ transplants, chronic lung and liver diseases, deafness, blindness, multiple sclerosis, paralysis etc. www.sundaytimes.lk

Digital, strong customer service boost HNB post-tax profit to Rs 16.7 bn

HNB, successfully weathering the challenges that arose in 2017 while leveraging upon new growth opportunities, posted a post-tax profit (PAT) of Rs 16.5 billion, up by 16.4 per cent from 2016.

Group PAT improved to Rs. 16.7 billion while the group’s asset base crossed the Rs. 1 trillion milestone, during the year.

In a media release, the bank said CASA growth of Rs. 23.4 billion during the year was a key achievement given the industry wide decline in CASA ratios as high interest rates attracted funds into fixed deposits. Nevertheless through concerted efforts HNB successfully maintained its CASA ratio while focusing on profitable business segments.

Net losses from trading doubled in 2017 to Rs 3.7 billion on account of higher swap costs. This loss was however offset by balance sheet translation gains, which together with foreign exchange income amounted to Rs. 3.2 billion and reflected under ‘other operating income.’

HNB’s profit before taxes and financial VAT was reported at Rs. 27.1 billion amounting to a growth of 10.5 per cent YoY while total tax charge for the bank and the group stood at Rs. 10.6 billion and Rs. 11.8 billion, respectively.

Commenting on HNB’s performance, MD/CEO Jonathan Alles said: “HNB’s performance in 2017 has been strong and resilient amidst relatively low economic growth and a tighter fiscal and monetary policy environment. Our proven business model and strategy centered on digital leadership, best in class processes, and an uncompromising stance on being the best service brand in the country has once again been validated in 2017.

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Seylan Group post-tax profit of Rs. 5 bn, 24% rise from 2016

The Seylan Banking group has recorded a post-tax profit of Rs. 5 billion for fiscal 2017, the highest profit reported in its history, while the bank itself reported a post-tax profit of Rs. 4.4 billion.

Net interest income recorded a moderate growth of 15.03 per cent as a result of the strong balance sheet growth, the group said in a media release.

Net fee and commission income rose by 22.07 per cent to Rs. 3,788 million in 2017 mainly due to core banking related business.

“Other operating income comprising of net gains from trading, net gains on financial instruments, gains on foreign exchange and other income increased by 39.18 per cent to Rs.1,660 million during 2017 mainly due to capital gains on Government Securities,” it said. Net credit (advances) grew by 19 per cent to Rs. 280,862 million.

The bank also continued focusing on education which has been at the centre of attention of CSR activities. During the year, 33 school libraries were opened taking the overall number of libraries opened under the project to 153 under the “Seylan Pehesara” Project. Further the Seylan Bank initiated the Environmental and Social Management System (ESMS) as a means of prudently devising the loan book growth, mitigating credit, legal and reputational risks if any that are inherent with environmental and social impact that may arise from advances granted to Corporate and SME clients.

The branch network continued to be the key contributor to the bottom line.

In 2017, the bank network comprised 166 Banking Centres and 205 ATMs. The bank said it remains well capitalised with a strong common equity tier 1 ratio of 11.16 per cent, total tier 1 capital ratio of 11.16 per cent, and total capital adequacy ratio of 13.25 per cent under Basel III as at 31st December 2017.

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SEC exercises vigilance on Janashakthi share trades

By Duruthu Edirimuni Chandrasekera

The Janashakthi Insurance PLC’s (Janashakthi) Rs. 16.4 billion sale earlier this month of its general insurance business to multinational insurer, Germany’s Allianz, has rung alarm bells at the stock market regulator after a spurt in the share price just before the sale, informed sources said.

The Securities and Exchange Commission (SEC) is investigating a sharp rise in the share price of Janashakthi Insurance which went up by 44 per cent from Rs. 16.10 on January 29 to Rs. 23.20 on February 1, a day before the February 2 deal, they told the Business Times.

According to the share trades, 853,000 shares were sold on January 29, 10.5 million shares on January 30 (at Rs. 20) and 7.8 million shares on February 1. On February 2, the day the deal was done, 16.4 million shares were transacted throughout the day, touching a high of Rs. 28.40 per share.

Analysts said that the regulator is looking at the over 10 million share sale by Bank of Ceylon (BoC). Informed sources said that selling this large Janashakthi stake three days before the company changed hands has led to an unusual share price increase.

The BoC at current market rates (at Rs. 20) made a profit by selling the stock which they bought years ago at Rs. 10, to high networth investor Indra Silva, but they could have made much more had they waited till the sale happened, analysts say.

The regulator is trying to find out how information on the sale was leaked (possibly to BoC) before this transaction with Allianz, the German-headquartered financial services giant happened, BoC officials confirmed to the Business Times. The SEC is now recording statements from certain BoC officials, they added. “The SEC wants to establish who had advised BoC on this sale and who had made the investment decision,” a banking source told the Business Times.

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