Sri Lankan rupee ends weaker; stocks slip from nearly 2-month high

Reuters: ** The Sri Lankan rupee ended slightly weaker on Friday due to dollar demand for outflows in government securities and stock-related transactions, sources said. Stocks slipped from its nearly two-month closing high hit in the previous session, as the political turmoil continues despite newly appointed Prime Minister Mahinda Rajapaksa’s attempts to resolve the political crisis.

** The rupee had traded at a record low of 175.65 per dollar on Thursday.

** The rupee ended at 174.30/50 per dollar on Friday, compared with previous close of 174.00/40. The rupee has dropped 0.7 percent ever since the political crisis unfolded last Friday.

** The rupee weakened 3.7 percent in October after a 4.7 percent drop in September against the dollar. It dropped 13.5 percent so far this year. 

** Sri Lankan opposition leader Mahinda Rajapaksa was appointed prime minister last Friday after President Sirisena dismissed the incumbent in a surprise move that threatens political turmoil in the South Asian country. 

** The appointment of Mahinda Rajapaksa as prime minister prompted protests and a demand for parliament to be called, to allow lawmakers to choose their leader. The return of Rajapaksa, a former president who crushed a decades-old Tamil insurgency, has stoked fears of fresh political and ethnic division in the island nation of 21 million mostly Sinhalese Buddhists, with Tamil and Muslim minorities.

** The Colombo stock index dropped 0.36 percent to 6,092.21, slipping from its highest close since Sept. 7 hit on Thursday. The bourse rose 4.5 percent since last Friday, but fell 1.5 percent last month and slipped 4.4 percent so far this year.

** Analysts said retail investors, who have stayed away from the market during a number of investigations against market manipulation that allegedly occurred under the previous government, actively bargain-hunted after the president’s announcement. 

** Data from the central bank showed that foreign investors sold government securities worth a net 3.9 billion rupees ($22.40 million) in the week ended Oct. 23. Sri Lanka has seen a net outflow of 89.8 billion rupees in securities so far this year. 

** Stock market turnover was 1.9 billion rupees on Friday, more than twice this year’s daily average of 798.3 million rupees. 

** Foreign investors turned net buyers first time in 15 sessions, and they were net buyers of shares worth 66.9 million rupees on Friday. However, foreign investors were net sellers of 13.3 billion rupees worth of shares so far this year.

($1 = 174.1000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez)

Amãna Bank’s 9 month PAT grows by 61%

Amãna Bank continued its strong profit momentum for the year as its Profit After Tax for the 9 months ending 30 September grew significantly by 61% YoY to reach Rs 429.9 million from Rs 266.8 million recorded a year ago. The Profit Before Tax for the same period grew by 50% YoY to reach Rs 597.1 million compared to Rs 397.0 million recorded in the corresponding period of 2017.

Supported by a consistent profitability trend over the past few years, the Bank, for the first time in its relatively short history, paid an interim dividend of 7 cents per share totaling to Rs 175.1 million during the last quarter.

With its banking activities primarily revolving on Retail and SME banking, Amãna Bank’s Financing Income recorded a 23.6% YoY growth to reach Rs 4.95 billion from Rs 4.0 billion recorded in 2017. Net Financing Income grew to Rs 2.40 billion from Rs 1.96 billion reflecting a 22.7% YoY growth. The Bank continued to maintain a healthy Financing Margin of 4.4% compared to 4.2% at end 2017. Complementing the strong momentum of growth in core banking, the Bank’s Net Fee and Commission Income reported a commendable YoY growth of 28.2%.

Despite the increase in impairment charge on advances and considering only a 9.6% overall increase in operating expenses, the Bank was successful in achieving an impressive 38.1% YoY growth in Operating Profit before all Taxes to close the third quarter with a cumulative amount of Rs 937.3 million.

Despite the overall tightness of liquidity in the market, Amãna Bank’s Customer Deposits grew by 14.3% for the nine months to close at Rs 58.20 billion owing to the growing acceptance of the Bank’s people friendly non-interest based banking model.

Due to prevailing general market conditions, the Bank’s Gross Non Performing Advances Ratio increased to 2.78% from 1.89% at end 2017, which is below the Industry Gross Non Performing ratio of 3.1% as at June 2018.The Bank’s Net Non Performing Advances Ratio stood at a healthy 1.18%.

Chief Executive Officer Mohamed Azmeer said “It is noteworthy to reflect on our continuous profitability achievements, which has been very encouraging. Looking back in retrospect of our 5 year strategic plan, the success we have achieved and sustained thus far is a result of the long-standing confidence placed in us by our valued customers, determined shareholders and devoted staff, for which we are humbly grateful.”

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Chevron Lubricants Sept. net falls amid flat top line

Sri Lanka’s lubricant market leader Chevron Lubricants Lanka PLC saw its earnings for the September quarter (3Q18) falling 21 percent year-on-year (YoY) to Rs.516.4 million with tepid growth in sales, the interim financial accounts released to the Colombo Stock Exchange showed. The revenue from lubricants sales edged up only 1 percent YoY to Rs.2.8 billion while the cost of sales rose at a much faster pace of 12 percent YoY to Rs.1.8 billion, resulting in a gross profit of little over Rs.1 billion, down 13 percent.

The earnings per share for the period deteriorated to Rs.2.15 from Rs.2.74 reported for the same quarter, last year.

According to the data released by Sri Lanka’s shadow lubricant market regulator, Public Utilities Commission of Sri Lanka (PUCSL), Chevron Lubricant Lanka’s market share had come down to 41.88 percent by the end of the first quarter of 2018 from 46.87 percent a year ago.

Indian Oil Corporation Limited operating through its local subsidiary, Lanka IOC PLC—Chevron Lubricant Lanka’s closest competitor was able to retain its market share at 16.67 percent being the second largest player in the market.

ExxonMobil, the third largest player in the market, had increased its share to 7.17 percent from 5.36 percent a year earlier while the State-owned Ceylon Petroleum Corporation saw its market share coming down to 6.98 percent from 7.86 percent a year ago.

Laugfs Lubricants, a more recent entrant to the crowded lube market had also increased its market share to 5.93 percent from 3.51 percent. Laugfs Lubricants remains the fifth largest player.

Sri Lanka’s overall lube market had shrunk to 16,843 kilo litres during the first quarter of 2018 compared to the 17,278 kilo litres sold during the same quarter of 2017.
Meanwhile, for the first nine months ended September 30, 2018, Chevron Lubricants Lanka reported earnings of Rs.7.17 a share or Rs.1.7 billion, down 14 percent YoY.

The revenue for the nine months grew 5 percent YoY to Rs.8.6 billion.

The company announced its third interim dividend of Rs.2 per share to be paid on November 19, 2018.

On May 22, Chevron’s long-serving Chief Executive Officer Kishu Gomes tendered his resignation and Rochna Kaul, General Manager of Chevron’s Asian-Pakistan region, who is also Chairman of Chevron Lubricants Lanka, took over as the Acting CEO.

The company in July announced the appointment of Patrick McCloud as the new CEO with effect from September 1, 2018.

Chevron Ceylon Limited has 51 percent of issued shares of the company.
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Record profitability for Q3 2018, says NDB

Sri Lanka's National Development Bank PLC (NDB) said this week it had posted an “impressive financial performance” for the nine months ending September 2018, with a record post-tax profit of Rs. 4 billion.

Profit attributable to shareholders (PAS) showed a growth of 42 per cent compared with the prior period amidst a challenging market conditions. “Strong growth was recorded in the Balance Sheet along with improvement in net interest margin (NIM), cost to income ratio (CIR) and returns to shareholders,” the bank said in a media release.

The bank recorded an operating profit before tax on financial services of Rs. 7.1 billion, up by 25 per cent over the comparative period of 2017.

NDB Group CEO Dimantha Seneviratne said that the recorded results are the clear output 

of the focused strategy the bank embarked in 2017 spanning up to year 2020. “The Group CEO stated with confidence that NDB is in a sound footing to achieve the medium terms goals of the strategy and bring prosperity t its valued customer base and all 

stakeholders,” the statement added.

Net interest income (NII) continued to grow in Q3 amidst marked industry challenges, with a 39 per cent growth in NII up to Rs.10.6 billion. Interest income grew by 17 per cent whereas the interest expenses increased only by 8 per cent directly benefitting from the sound balance sheet management and ALCO strategies.

Reflecting the industry-wide trend of rising non-performing loans, the impairment charges for loans and other losses of the bank for Q3 2018 increased to Rs.2.4 billion, compared to Rs. 872 million for the corresponding period of the prior year. Individual impairment of Rs. 1.5 billion for the period represented precautionary provisions made by the bank for selective individually significant facilities, on a prudent basis, given the challenging economic environment.

Customer deposits recorded exceptional growth of 20 per cent over 2017 to reach Rs.329 billion, which translated to a quantum increase of Rs. 55 billion whilst the year-on-year growth was Rs. 73 billion. Of this growth, over Rs.12 billion of growth was recorded in the low cost current and savings deposits (CASA).

The growth in the loan book which equated the growth in customer deposits helped the bank improve its Loans to Deposits Ratio (LDR) to 102 per cent, the best recorded so far by the bank since converting to a fully-fledged commercial bank from the development banking model.
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Sri Lanka's Nations Trust Bank Sept net down 3-pct

ECONOMYNEXT - Profits at Sri Lanka's Nations Trust Bank Plc grew a marginal 3 percent from a year earlier to 1 billion rupees in the September 2018 quarter, weighed down by higher provisioning for bad loans, interim results showed.

The bank reported earnings of 3.76 rupees a share in the quarter. In the nine months to end September, earnings were 3.51 rupees a share on a profit of 974 million rupees, down 7 percent from a year earlier, interim accounts filed with the Colombo Stock Exchange showed.

Nations Trust Bank ended 3.90 rupees higher at 89.90 rupees on Thursday.

"The bank...(withstood) multiple challenges as witnessed across the industry with increasing non-performing loans, tightening of liquidity and moderating credit growth which particularly hindered the performance for the quarter," Nations Trust Bank said in a statement issued to shareholders.

In the quarter, net interest income rose 24 percent from a year earlier to 3.9 billion rupees, as interest income grew 20 percent to 9.6 billion rupees and interest costs grew a slower 17 percent to 5.7 billion rupees.

Interest income recorded faster growth due to "increased growth in loan volumes and effective pricing of the loan book" the bank said.

Interest expense growth was lower "due to the higher drop in cost of funds in comparison to the previous period. Nevertheless, the Bank noted a gradual rise in its cost of funds with the increasing interest rate environment which prevailed during the third quarter of 2018".

Net fee and commission income rose 15 percent to 1.6 billion rupees with trade finance, syndication based facility fees and bancassurance fees contributing to a larger portion of the increase, the bank said.

Bad loans provisioning surged 659 percent to 1 billion rupees.

"Impairment charges for the current year increased as some portfolios of the loan book experienced cash flow stresses," the bank said.

Personnel expenses rose 11 percent to 1 billion rupees and other operational costs grew 23 percent to 1.3 billion rupees.

The bank reported gains of 0.4 million rupees from trading in financial assets, up from a 255.5 million loss a year earlier.

"Net trading losses dropped significantly during the period under review as customer and trading FX reported a higher growth rate coupled with the drop in the SWAP book and the resultant forward premiums," the bank said.

Nations Trust Bank's loan book expanded 18 percent from nine months earlier to 219.6 billion rupees at end September 2018.

The bank's deposit base had also grown by 18 percent during this period to 228.9 billion rupees.

The Tier I capital adequacy ratio was at 10.87 percent at end September 2018, above the regulatory minimum of 7.875 percent, and was slightly higher from 10.83 percent nine months earlier.

Total capital adequacy was 14.66 percent at end September, higher than the 13.89 percent ratio nine months earlier, and above the 11.875 percent regulatory minimum.

"Managing impairment has been a key area of focus for us during the past few months whereby we have reorganized our collection shops and hope to keep a close watch in the upcoming months and will continue to focus until the stress on selective portfolios stabilise," said Renuka Fernando, Nations Trust Bank's CEO.

Sri Lanka's DFCC Bank Sep net up 90-pct on capital gain

ECONOMYNEXT - Profits at Sri Lanka's listed DFCC Bank Plc rose 90 percent from a year earlier to 810.8 million rupees in the September 2018 quarter despite rising provisioning for bad loans on improving interest margins and a one-off gain from equity sales, interim accounts showed.

The banking group reported earnings of 3.06 rupees a share in the quarter. For the nine months to end September 2018, earnings were 9.54 rupees a share on a profit of 2.5 billion rupees, down 26 percent from a year earlier.

DFCC Bank closed 5 rupees higher at 97.60 rupees on Thursday.

In the September quarter, net interest income grew 18 percent from a year earlier to 3.5 billion rupees, as interest income rose 15 percent to 10 billion rupees and interest expenses increased 14 percent to 6.6 billion rupees.

Net interest income growth was achieved by expanding the loan book and re-pricing deposit liabilities, DFCC Bank said.

The bank reported an interest margin of 3.8 percent at end September, up from 3.6 percent nine months earlier.

Net fee and commission income grew 25 percent to 515.5 million rupees.

Net gains from financial instruments surged 359 percent to 2.2 billion rupees on account of gains from the sale of shares of listed Commercial Bank of Ceylon Plc, which was a one-off gain, DFCC Bank said.

The banking group reported a net operating loss of 2.2 billion rupees in the quarter, down from a profit of 445 million rupees a year earlier, due to a 3.8 billion foreign exchange loss in the period, deepening from a loss of 613 million rupees a year earlier.

Bad loans provisioning increased 2 percent from a year earlier to 490.3 million rupees. Non-performing loans were 3.26 percent of total loans, up from 2.77 percent nine months earlier.

The rise in non-performing loans was due to "adverse environmental conditions that prevailed during this time," Lakshman Silva, Chief Executive Officer at DFCC Bank told shareholders in a statement.

"However, recovery processes are being rigorously pursued to minimize any actual losses that may arise from such exposures," he said.

Operating expenses including personnel costs and investments in branch expansions rose 22 percent to 1.7 billion rupees, the banking group said.

DFCC Bank's loan book expanded 14 percent from nine months earlier to 243.4 billion rupees at end September 2018. Its deposit based grew a faster 19 percent to 230.4 billion rupees.

"The bank’s CASA ratio, which represents low cost deposits over the total deposits of the bank was 20.1 percent at end September 2018," Silva said.

"DFCC bank continues to enjoy medium to long term low cost borrowing lines that helped to reduce the funding cost. When these term borrowings are added to deposits, the ratio improved to 27.7 percent as at 30 September 2018," he said.

DFCC Bank's Tier 1 capital ratio was 10.36 percent at end September 2018, down from 13.093 percnt nine months earlier but higher than the regulatory minimum of 7.875 percent.

Total capital adequecy was 16.067 percent, higher than the regulatory minimum of 11.875 rupees, but lower than the 16.529 percent achieved nine months earlier.

Sri Lanka's Jetwing Symphony Sep losses widen 11.9-pct

ECONOMYNEXT- Sri Lanka's Jetwing Symphony Plc, a holding company for some of the newer equity owned hotels of Sri Lanka's Jetwing Group, saw its net losses deepen 11.9 percent from a year earlier to 81.7 million rupees in the September 2018 quarter, with currency losses in converting a foreign loan, interim accounts showed.

The loss per share for the quarter was 16 cents. In the six months to end September the loss per share was 47 cents on a net loss of 236.9 million rupees, up 2 percent from a year earlier.

The stock was trading flat at 13 rupees Thursday.

Arrivals to Sri Lanka during the quarter increased 4.8 percent to 567,275 tourists from a year earlier.

In the quarter, Jetwing Symphony's revenue grew 36 percent from a year earlier to 520.3 million rupees, while cost of sales were up 17 percent to 81.4 million rupees, leading to gross profits increasing 39.9 percent to 439 million rupees.

Administrative expenses grew 23 percent to 234.2 million rupees.

The biggest hit on profits came from the exchange loss from the conversion of a foreign currency loan at 83.4 million rupees, falling from a gain of 2.3 million rupees a year ago.

The rupee has faced sharp depreciation since August amid central bank liquidity mismanagement.

The firm's total assets at the end of September stood at 10 billion rupees, down marginally from 10.2 billion rupees at the start of the financial year in April.

Long and short-term borrowings totaled 4.3 billion rupees, unchanged from 6 months earlier.

The firm operates five Jetwing hotels, while one more is under construction. It went public last December to finance construction and settle past debt.

Sri Lanka's Pan Asia Bank Sep net down 13-pct

ECONOMYNEXT - Profits at Sri Lanka's listed Pan Asia Bank fell 13 percent from a year earlier to 260.7 million rupees in the September 2018 quarter, on higher bad loans provisioning and rising operational costs, interim accounts showed.

The bank reported earnings of 2.34 rupees a share in the quarter. For the nine months to end September 2018, earnings were 3.26 rupees a share on a profit of 1.08 billion rupees, up 18 percent from a year earlier, interim accounts filed with the Colombo Stock Exchange showed.

Pan Asia Bank closed 40 cents lower Wednesday at 13.50 rupees.

In the September quarter, net interest income grew 25 percent from a year earlier to 1.6 billion rupees as interest income rose 22 percent to 4.8 billion rupees and interest expenses increased 20 percent to 3.3 billion rupees.

Net fees and commission income rose 28 percent to 2.2 billion rupees.

Bad loans provisioning rose 159 percent to 584.6 million rupees.

Operating costs increased by 14.5 percent to 1 billion rupees.

Pan Asia Bank's deposit base expanded 8 percent from nine months earlier to 116.3 billion rupees at end September, while its loan book grew a faster 12 percent to 122.7 billion rupees.

Non-performing loans were 4.83 percent of total loans at end September 2018, up from 4.36 percent nine months earlier.

Pan Asia Bank reported a net interest margin of 4.01 percent in the quarter, up from 3.61 percent at end December 2017.

At end September 2018, the bank's Tier I Capital Ratio was 10.65 percent, higher than the regulatory minimum of 7.875 percent, but was down from 11.38 percent nine months earlier.

Total Capital ratio was at 12.11 percent, down from 13.53 percent nine months earlier, but higher than the regulatory minimum of 11.875 percent.

Sri Lanka's LB Finance Sept net up 30-pct

ECONOMYNEXT - Profits at Sri Lanka's LB Finance Plc rose 30 percent from a year earlier to 1.2 billion rupees in the September 2018 quarter on improving interest income margins and fee income, interim accounts showed.

Earnings were 8.89 rupees a share in the quarter. In the six months to end September, earnings were 17.30 rupees a share on a profit of 2.4 billion rupees, up 26 percent from a year earlier.

The finance company stock was down 2.70 rupees to 117.30 rupees on Wednesday.

In the quarter, net interest income grew 30 percent from a year earlier to 3.6 billion rupees as interest income rose 21 percent to 6.8 billion rupees and interest expenses increased a slower 12 percent to 3.2 billion rupees.

Fee and commission income grew 16 percent to 401.3 million rupees.

Bad loans provisioning rose 156 percent to 326 million rupees.

Operating costs increased 8.9 percent to 1.4 billion rupees.

LB Finance's loan book expanded 5 percent from six months earlier to 42 billion rupees at end September, while its leasing portfolio grew 4 percent in the same period to 65 billion rupees.

Customer deposits grew 7 percent to 78 billion rupees.

LB Finance's core capital adequacy was at 12.88 percent at end September 2018, higher than the regulatory minimum of 5 percent, but was lower than 14.44 percent six months earlier.

Total capital adequacy was at 15.76 percent, higher than six months earlier which was at 14.44 percent, and above the 10 percent regulatory minimum.

Sri Lanka's Kingsbury hotel Sept net down 46-pct

ECONOMYNEXT - Profits at Sri Lanka's The Kingsbury Plc, the city hotel of listed conglomerate Hayleys Plc, fell 46 percent in the September quarter from a year earlier to 41.8 million rupees, on flat revenue growth and rising costs, interim accounts showed.

The hotel reported earnings of 32 cents a share in the quarter.

In the six months to end September - the off-season for tourism - earnings were 14 cents a share on a profit of 34.5 million rupees, down 32 percent from a year earlier.

The stock closed 1 rupee lower on Wednesday at 15.30 rupees.

During the quarter, revenue growth was flat from a year earlier at 834 million rupees, cost of sales fell 5 percent to 382.4 million rupees and turnover tax grew a marginal 1 percent to 26.6 million rupees resulting in gross profits growing 4 percent to 425 million rupees.

Administrative costs rose 5 percent to 282.7 million rupees.

Net finance cost increased 261 percent to 50.9 million rupees despite borrowings shrinking 11 percent from a year earlier to 1.2 billion rupees at end September 2018 and cash deposits held with banks growing 180 percent to 266.6 million rupees.

Sri Lanka’s Teejay Lanka Sept quarter net profit up 15-pct

ECONOMYNEXT – Teejay Lanka said net profit rose 15 percent to 426 million rupees in the September 2018 quarter from a year ago owing to expended capacity and strong orders arising from duty free access for apparel exports to Europe.

The Sri Lankan fabric supplier’s sales in the second quarter of 2018-19 was up 25 percent to 7.6 billion rupees over the period, interim accounts filed with the stock exchange showed.

Quarterly earnings per share were 61 cents. EPS for the six months to September 2018 were one rupee with sales up 25 percent to 14.4 billion rupees.

Teejay Lanka chairman Bill Lam said in a statement this was the fourth consecutive quarter of revenue and net profit growth for the company in the face of stiff challenges.

It was made possible by expanded capacity in the group and a strong order book arising from the GSP duty free facilities to the European Union that it enjoys.

Sri Lanka’s Piramal Glass in Sept quarter loss as costs rise

ECONOMYNEXT - Sri Lanka’s Piramal Glass Ceylon said it made a loss of 8.5 million rupees in the September 2018 quarter compared with net profit of 49 million rupees a year ago as higher fuel prices raise costs.

Sales during the second quarter of FY2018-19 rose 12 percent to 1,878 million rupees, although domestic sales were stagnant, interim results filed with the stock exchange showed.

The container glass maker, a unit of India’s Piramal group, reported a loss per share of one cent in the September 2018 quarter compared with earnings per share of five cents the previous year.

In the six months to September 2018 EPS fell to four cents from 16 cents in the same 2017 period.

“Whilst during the quarter, the company ensured a top line growth of 12%, gross profit margins fell from 21% to 10%,” the company said in a statement.

Piramal Glass Ceylon said it is investing in a new bottle production line which would enable it to increase production of smaller bottles to meet a shift in consumer preferences to smaller pack sizes that also eroded gross profit.

“Due to the increase in levies and taxes, the final products are becoming more expensive. This has resulted in the consumer shifting towards smaller pack sizes.”

The quarterly loss stemmed mainly from higher costs whose full impact will be felt in future quarters, the company said.

“The gross profit during the period under review was severely impacted by the fuel increase which in turn has directly impacted the prices of raw materials, packing material and transportation costs.

“The margins further declined due to the increase in LPG costs by 35% and furnace oil increase by 15%.

“The published results are only partly impacted by this, with the full impact being yet to be felt in the future quarters. In this situation, the company has been compelled to pass on part of the inflation to the second half of the current financial year.”

Piramal Glass Ceylon said it managed to increase exports to offset low domestic demand with export sales up by 55 percent to 1.4 billion rupees.

“The management made special efforts to expand their sales in the export market in a bid to offset the domestic setback,” the statement said.

Exports to Canada, USA, Vietnam and India took the lead amongst the increased export sales.

Sri Lanka Asian Hotels and Properties September net down 48-pct

ECONOMYNEXT- Sri Lanka's Asian Hotels and Properties Plc, the city hotel and property development arm of John Keells Holdings, said net profits halved from a year earlier to 214.8 million rupees in the September quarter on falling sales.

The company reported earnings of 49 cents a share in the quarter. In the six months to end September 2018, earnings were 63 cents a share on a profit of 279.7 million rupees, down 60 percent from a year earlier.

Asian Hotels and Properties was trading 50 cents higher Tuesday at 42.50 rupees.

In the quarter, sales fell 14 percent from a year ago to 2 billion rupees, while cost of sales fell 10 percent to 873.6 million rupees, leading to gross profits falling 17 percent to 1.1 billion rupees.

Revenue from the leisure arm, which includes the Cinnamon Grand and the Cinnamon Lakeside, fell 14.7 percent to 1.9 billion rupees, while net profits fell 58.4 percent to 201.3 million rupees.

Revenue from the property arm was flat at 102.8 million rupees while net profits increased 20.3 percent from a year ago to 56.1 million rupees.

The balance sheet showed little change from the start of the financial year six months earlier, with total assets of 41.3 billion rupees and net assets per share of 42 rupees.

Sri Lanka’s Seylan Bank September net down 6.1-pct

ECONOMYNEXT - Profits at Sri Lanka’s Seylan Bank fell 6.1 percent from a year ago to 1.1 billion rupees in the September 2018 quarter, on falling foreign exchange and investment income and higher bad loan provisioning, interim accounts showed.

The bank reported earnings of 3.13 rupees per share in the quarter. For the nine months ending September 2018, earnings were 8.54 rupees a share, on a profit of 3.1 billion rupees, down 11 percent from a year earlier.

Seylan Bank was trading 2.70 rupees higher on Monday at 70 rupees.

In the September quarter, net interest income grew 5.9 percent from a year ago to 4.4 billion rupees, as interest income grew 9.14 percent to 12.3 billion rupees and interest expenses increased a faster 11 percent to 8 billion rupees.

Net fee and commission income grew 1.32 percent to 991 million rupees.

Trading income was 502 million rupees, up from a trading loss of 202 million rupees a year ago.

Foreign exchange losses were 184.7 million in the quarter, down from a profit 401.9 million rupees a year earlier.

Bad loan provisioning had increased 121.2 percent to 581.9 million rupees, mostly due to the adoption of new accounting standards IFRS 9.

An assessment of the new accounting standard at end December 2017 had shown that bad-loan provisioning would increase by about 30-45 percent, the bank said.

Bad loan provisioning also increased as non-performing loans rose in the September quarter.

Non-performing loan ratio increased to 5.6 percent at end September 2018, up from 4.4 percent at end December 2017.

Seylan Bank’s loan book grew 11.7 percent from nine-months earlier to 313.7 billion rupees at end September 2018.

The bank’s deposits grew 8.8 percent to 334 billion rupees.

Total tier 1 capital ratio was 10.19 percent, above the minimum requirement of 7.88 percent, but lower than the 11.16 percent recorded in December 2017.

Seylan Bank’s total capital ratio was 13.54 percent, above the minimum requirement of 11.88 percent and slightly higher than the December 2017 number of 13.25 percent.

Sri Lanka’s LVL Energy diversifies into solar power with 7 plants

ECONOMYNEXT – LVL Energy Fund plans to diversify into solar power with seven new plants in Sri Lanka, adding total generation capacity of 7 megawatts costing 1.2 billion rupees, each having 20-year deals to sell power.

“We are on our way to setting up our first-ever solar power plants and we are very pleased to be diversifying into this highly sustainable and eco-friendly source of energy,” said Sumith Arangala, chief executive of LVL Energy Fund.

LVL Energy Fund, which invests in power projects in Sri Lanka and the region, will set up the solar plants in partnership with First Energy SL (Pvt) Ltd. in strategic locations across the island, a statement said.

LVL Energy Fund, a subsidiary of Lanka Ventures, already has several hydro, wind and thermal energy units in operation in Sri Lanka, Bangladesh and Nepal.

The new plants are being set up in response to a tender launched by the Ceylon Electricity Board (CEB), calling for the setting up of 90 power plants with a capacity of 1 MW each.

The new LVL solar energy capacity will consist of 3 MW located in Maho, 2 MW in Pallekele and plants in Mathugama and Embilipitiya each generating 1 MW.

Connected to 4 grid substations in these locations, each power project is to be developed on a Build, Own & Operate (BOO) basis.

The tenure of power purchase agreement for each plant is 20 years, and the entire implementation and set up process of the power plants is estimated to take about six months on receiving all approvals.

Sri Lanka’John Keells Hotels September net down 99-pct

ECONOMYNEXT – Profits at Sri Lanka's listed John Keells Hotels was down 99 percent from a year earlier to 850,000 rupees in the September 2018 quarter amidst the closure of two hotels for refurbishment and another for reconstruction, interim account showed.

Earnings per share were negligible in the quarter. For the six months to end September 2018, the company reported an 18 cent loss per share, on a loss of 262 million rupees, down 101 rupees from a year earlier, interim accounts showed.

The stock was up 20 cents to Monday to 7.90 rupees.

In the quarter, revenue was down 5 percent from a year earlier to 2.4 billion rupees and cost of sales fell a faster 18 percent to 798.2 million rupees leading to gross profits contracting 3 percent to 1.6 billion rupees.

Ellaidhoo Maldives by Cinnamon was partially closed during June-October, while Bentota Beach by Cinnamon was demolished in July 2017 for reconstruction, the company said.

Other operating income fell 93.8 percent to 6.6 million rupees.

Other operating expenses increased 25 percent to 341.6 million rupees due to the closure of Cinnamon Hakuraa Huraa in the Maldives for refurbishment, the company said.

Net finance costs were 2.5 million rupees in the quarter, compared to a net finance income of 24.9 million rupees a year earlier.

Profits from Sri Lankan hotels dropped 49 percent in the September quarter to 95.3 million rupees from a year earlier, while the Maldives hotels saw losses increase by 11.3 percent to 92.3 million rupees.

While sales from Sri Lankan operations grew 2.8 percent to 1.4 billion rupees from a year earlier, sales in the Maldives arm dropped 14.7 percent to 979.8 million rupees.

Arrivals to Sri Lanka during the quarter increased 4.8 percent to 567,275 tourists from a year earlier, while in the Maldives, 353,944 foreigners visited, a growth of 4 percent.

The hotel chain's total assets increased to 34.2 billion rupees by end-September from 33.2 billion rupees at the start of the financial year, with net assets per share growing to 18.52 rupees from 18 rupees.

Long-term interest bearing borrowings fell to 2.6 billion rupees from 2.8 billion rupees over the 6 months, while short-term borrowings fell to 1.18 billion rupees from 1.22 billion rupees.

Lanka IOC back in profits after raising fuel prices

ECONOMYNEXT- Sri Lanka unit of India Oil Company, Lanka IOC Plc, returned to the black with a net profit of 207.3 million rupees in the September 2018 quarter, up from a loss of 176.9 million rupees a year earlier, after it was allowed to raise fuel prices, amidst sharp cost cuts, interim accounts showed.

It reported earnings of 39 cents for the quarter in the quarter. Earnings for the first six months to end September were 85 cents a share on a profit of 453.2 million rupees, up from a loss of 312.1 million rupees a year earlier.

Lanka IOC fell 20 cents to 27.10 rupees on Monday.

Revenue for the September quarter grew 2.1 percent from a year earlier to 25.6 billion rupees, cost of sales fell 1 percent to 24 billion rupees leading to gross profits doubling to 1.5 billion rupees.

In May, the government put in place a formula that would change local fuel prices based on global oil price movements every month.

Selling and distribution expense fell 22.8 percent to 580.2 million rupees from a year earlier, while administrative expenses were down 29.3 percent to 364.2 million rupees.

Finance costs increased over tenfold to 546.2 million rupees from 48 million rupees a year earlier.

Lanka IOC's assets grew to 40.3 billion rupees from 33 billion rupees at the start of the financial year with increased inventories.

Borrowings, all short-term, increased to 7.1 billion rupees in September from 5 billion rupees in March.