Sri Lanka sells Rs20bn in 10-year bonds

COLOMBO (EconomyNext) – Sri Lanka has sold 20 billion rupees in 10-year bonds at a weighted average yield of 10.03 percent and 5.3 billion rupees in five-year bonds at a yield of 5.07 percent, the state debt office said.

It offered 20 billion rupees in 10 year bonds at a coupon rate of 10.25 percent and five billion rupees in five year bonds at a coupon of eight percent.

The debt office received bids of 48 billion rupees for the 10 year bonds and bids of 22.8 billion rupees for the five year bonds.

Sri Lankan shares fall for 6th session on margin calls, political woes

(Reuters) - Sri Lankan shares fell for a sixth straight session on Monday and closed at their lowest in more than eight months as mostly retail investors sold their stocks to settle margin trading, while political worries also weighed on sentiment.

The main stock index ended down 1.33 percent, or 91.09 points, at 6,782.43, its lowest close since July 24 and moving away from a key psychological support level of 6,800. It has lost 7.31 percent in the past 21 sessions.

"Investors have been selling blue chips and political uncertainty still weighs," a stockbroker said on condition of anonymity.

Analysts expect the next support level at 6,500.

Shares in Commercial Bank of Ceylon Plc, the country's biggest listed lender, fell 2.46 percent. Top mobile phone operator Dialog Axiata Plc fell 2.78 percent.

The market heavyweight John Keells Holdings Plc fell 2.14 percent to a 32-month low of 195.50 rupees.

The day's turnover was 457.3 million rupees ($3.44 million), less than half of this year's daily average of 1.19 billion rupees.

Foreign investors were net sellers for the sixth straight session. They have sold a net 42.7 million rupees worth of shares on Monday, extending the net foreign selling in the past six sessions to 373.7 million rupees worth shares. But they have been net buyers of 2.98 billion rupees so far this year.

Analysts said concerns that the government's decision-making process would slow down weighed on sentiment after President Maithripala Sirisena formed a national government incorporating the main opposition party in a bid to push through reforms and preserve political stability. 

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Gopakumar Warrier)

People’s Bank posts best ever results in 53 years

Group profit before tax exceeds Rs 21 billion

Notching a host of record breaking numbers, People’s Bank closed 2014 with an impressive performance, posting the milestone of Rs 1 trillion in its balance sheet, only the second bank in Sri Lanka to do so.

People’s Bank also notched the best profitability for an year end, since its inception in 1961. Augmenting its balance sheet of Rs 1 trillion, this year’s Profit Before Tax inclined 67.2% to stand at Rs 17,231 mn, while Profit After Tax was pushed upwards by an impressive 89.9% displayed at Rs 14,219 mn. The Bank’s financial performance for 2014 is unequivocally impressive. Net Interest Income is posted at Rs 30,118 mn, while the Net Interest Margin reached 3.1 %, despite the entire banking industry battling the downward pressure exerted on interest rates. Gross Interest Income reached Rs 84,480 mn, compared to Rs 110,441 mn last year, primarily due to this decline in interest rates, coupled with the downsizing of the pawning portfolio. Interest Expense stands at Rs 54,362 Mn against last year’s.

Rs 73,791 mn with the decrease attributed to the cascading impacts of declining interest rates and replacing of higher cost deposits with low cost saving deposits growth. Observing the details of the impressive Rs 1 Tn balance sheet, Gross Loans and Advances reached Rs 685,310 Mn by end 2014, indicating an incline of 0.6%. With the permeating global gold crisis impacting the pawning industry significantly from 2013 onwards, the Bank was prudent and instituted some dynamics to decrease its exposure which emerged at 16.6% in 2014 of the total Gross Loans, which in 2013 stood at a high of 28.9%. Pawning balance reached Rs 113,946 Mn indicating a reduction of Rs 83,183 Mn in comparison to last year. The Bank focused emphatically on broadening its lending portfolio, heralding an increase to 87,026 Mn in lending to other customers.

With probably the country’s largest savings base now exceeding Rs 318 Bn with increasing customer confidence, Deposits reached Rs 793,342 Mn indicating a 4.1% improvement over 2013. This was due to the Bank taking advantage of the low interest rate regime and aggressive marketing and promotional campaigns aimed at mobilizing low cost deposits. Having a commendable CASA ratio of 46.3% , the Bank’s Saving Deposits grew by Rs 62,967 Mn, although Time Deposits declined by

Rs 42,945 Mn. Advances to Deposits ratio is detailed at 86.4% for end 2014.

Chairman Hemasiri Fernando said the Bank has proven repeatedly that its unique brand of ‘banking by the people, for the people’ is the formula to its success. “We also continue being the most accessible bank in Sri Lanka, possessing the widest branch network of 739 branches and in excess of 3,000 strong ATM network, the largest in the country.

But Fernando adds that the Bank must continue to foster its stringent compliance culture, as well as that unrelenting focus on ethics, transparency and accountability.

“We have earned a rating of AA+ by Fitch Rating, which proves that we are a stable and progressive bank. We have also showcased our leadership prowess in an intensely competitive banking environment with the results you are seeing today and also the continuous progressive initiatives the Bank introduces to optimise performance and build sustainable relationships with our stakeholders.”

CEO and General Manager N. Vasantha Kumar said “Being a state owned bank, we have an ingrained responsibility to ensure that our stakeholders’ trust and confidence is consistent, strong and enduring. This means, that our focus should not only centered on a quantitative sense, though important, as seen in our impressive results, but also in the qualitative dynamics we continue to infuse through the decisions we make. Whatever we do, the impact on our stakeholders must be positive.” www.dailynews.lk

HNB in 'landmark' deal with ADB Raising USD 100 million from 7-year loan

HNB entered into a landmark agreement with the Asian Development Bank (ADB) to raise USD 100Mn by way of a 7 year senior debt. This is the largest transaction by ADB with a Sri Lankan private sector bank and the funds raised would be deployed towards infrastructure development projects with special emphasis on renewable energy, power and irrigation which are key sectors in the economic resurgence of Sri Lanka.

ADB which was founded in 1966, has been driven by an inspiration and dedication to improving people's lives in Asia and the Pacific. It is committed to help developing member countries to evolve towards modern economies that are well integrated with rest of the world.

Commenting on this epic transaction Jonathan Alles, Managing Director, CEO of HNB PLC stated that "we are delighted to partner with ADB to raise long term funding for the Bank. This is testimony to the trust placed by international investors and funding institutions in HNB. Since 2012 HNB has raised nearly Rs 30 billion from foreign sources at attractive rates and this clearly demonstrates the Bank's sustainable business model, robust growth trajectory, strong capital structure and its lead position in the banking industry".

He added that "Sri Lanka in its journey of reaching upper middle class status will spur growth in corporate and SME investments and the availability of infrastructure would be a key enabler. We as a leading private commercial bank in the Country are pleased to facilitate these developments through partnering with ADB".

The agreement was signed in Colombo by Mrs Rose Cooray, Director and Mr. Jonathan Alles, Managing Director/CEO on behalf of HNB and by Ms Sri Widowati Country Director on behalf of ADB.

HNB became the first Sri Lankan bank to obtain an international credit rating and was assigned a foreign currency issuer rating of B1 on par with the sovereign rating by Moody's Investors Service, while it has a national long term rating of AA- (lka) by Fitch Ratings (Lanka) Ltd.
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Sanasa Development Bank profits soar by 100 % in 2014

SANASA Development Bank PLC (SDB) said on Wednesday that it recorded an ‘outstanding performance’ for the financial year ending December 2014 with profits up by 103 per cent.

In a media statement, the development bank said that last quarter profits also rose sharply by 450 per cent. “With these growth rates, SDB recorded a profit after tax of Rs. 504 million during 2014,” the bank said.

Other performance indicators also reflected significant increases indicating a definite growth trend in the bank’s performance in the year ending 2014. The Total Interest Income grew by 10 per cent on a Y-O-Y basis.

The bank’s net fee and commission income grew by 35 per cent from Rs. 120 million in 2013 to Rs. 162 million in 2014, primarily due to the increase in the overall asset base of the bank.

As a strategic move, SANASA divested its equity investment in Peoples Leasing and Finance PLC last year.

The SDB, which started its business in 1997, now has a network of 82 branches and is preparing for the next level of banking which is expanding services to gear itself to cater to the lower end of the SME sector as well.

Bank deposits grew from Rs. 23 billion in 2013 to Rs. 30 billion in 2014 with two new attractive loan products targetting government pensioners and ex-service personnel in second half of 2014 contributing to the growth in the loan portfolio.

Commenting on the success in 2014, SDB CEO Nimal C. Hapuarachchi added, “Over the years, we have been able to support a large number of individuals, households and communities across the country, to empower themselves from the grassroots level to a sustainable level of growth in the medium and long term through responsible financing”. 

Bank Chairperson M.S. Kiriwandeniya said, “While we are gearing ourselves to step into the next level of service in the SME sector we are also constantly keeping our pulse on the needs of our core clientele and improvising products to suit their needs and demands.”
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Colombo bourse chugs along the same route – analysts say

Share price trends have been on the lower side for several weeks since a new administration emerged with analysts attributing the downturn to a combination of reasons including uncertainty over impending polls and, as of this week, the approaching April season.

The Colombo bourse started the week on a slightly higher note on Monday’s early trade in another trading session marked by thin trade, but closed the week on a slump owing to investors opting to wait of a ‘clearer direction’, brokers said.

The momentous coalition between the country’s two main political parties, UNP and SLFP didn’t do much to uplift the listless sentiment in the Colombo bourse with the indices edging higher in early trades during the first three days and ending lower by day’s close. This pattern changed during Thursday when indices slumped right throughout.

During the week a common chorus by analysts was that traders opted to stay on the sidelines amid the developments in the political and economic fronts as the days dragged on. Brokers lamented that the index has fallen below 7,000 after nearly seven months. They added that activity levels weren’t high for the past few weeks, another reason why the market momentum isn’t picking up. “The retail and the high networth investors are waiting on the sidelines till the elections are over,” an analyst said, noting that both these segments are hardly investing based on fundamentals.

“This isn’t the case with foreigners,” he said, noting that this is why they have been net buyers for the most part of this year. A broker added that the market will ‘chug along’

in the same mode till April end. “This has much to do with the lack of direction and the holiday season,” he said.

On Friday, Colombo shares showed early gains with media reports of President Maithripala Sirisena promising the Chinese government that Sri Lanka intends to resume the contentious port project after problems are “sorted” out, only to fall at the close.

“This was a sore point in the share market, where questions were being raised about Sri Lanka halting the US$1.4 billion port city project, which was damaging ties with China. Many investors were questioning this move which impacted the market negatively in the past months,” an analyst said. He said that suspending this project would deter foreign investors.

But the market shed returns on Friday for the fifth consecutive session amid the uncertainties in the government policies which continued to affect the market sentiments, analysts said.
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SEC probes take a decisive turn

By Duruthu Edirimuni Chandrasekera

The Securities and Exchange Commission (SEC) is reopening investigations in cases that were closed during the past regime in a bid to determine if ‘all’ information had been considered in scrutinising the alleged malpractices especially when files were closed due to ‘insufficient’ information.

“This was a popular ‘excuse’ when certain probes didn’t see the light of day,” an analyst commented, adding that this should be sufficient cause to restart inquiries pertaining to market misconduct.

This new turn in the SEC has come on the back of Prime Minister Ranil Wickremasinghe slamming corrupt sections of Sri Lanka’s private sector to the extent of naming businessmen like Dilith Jayaweera and Nimal Perera.

“There are a number of allegations of violations of the Colombo Stock Exchange market rules and SEC regulations. The minor ones were compounded. Thirteen large cases were abandoned purportedly on a lack of evidence,” he told parliament, adding that they were not probed or were settled when it should have been probed further.

“I would like this to be recorded in the Hansard. I have requested the Securities and Exchange Commission to go into these cases. If necessary, I will bring legislation to permit such inquiry. I am also seeking the appointment of a Parliamentary Select Committee (PSC) to inquire into these transactions.”

A SEC source said that a PSC is not immediate, but his comments on compounding and abandoning certain cases purportedly were being pursued in all ‘seriousness’. “We want to verify whether earlier they (SEC) had ‘sufficiently’ gone into matters with these probes.” Further he said that many are now coming forward with stock market related complaints as they feel that there’s a free and fair climate for investigations. “They are free from fear and intimidation,” he said, noting that the SEC has got a ‘substantial’ number of complaints pertaining to share market misconduct during the past two months.

“We have received files full of complaints. Some are with names and some anonymous,” he said, adding that these complaints range from manipulation, insider dreading, pump and dump, stockbrokers and investment advisors misleading small shareholders, trading on accounts under third party names, etc.
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