Sri Lanka's Hatton National Bank expects 15-pct credit growth in 2016

ECONOMYNEXT - Sri Lanka's Hatton National Bank is expecting to grow its loan portfolio 15 percent in 2016, driven by small and medium enterprises and personal banking, slowing from 26 percent last year, officials said.

HNB grew its loan book 26 percent with strong growth in corporate loans for working capital, projects and dollar denominated loans, Chief Executive Jonathan Alles told an analysts forum.

The bank had also loaned about 100 million in dollar loans including to Maldives based firms in partnership with other lenders, he said.

The margins in dollar loans to Maldives were higher than in Sri Lanka and closer to 7 percent, he said.

In 2015 the loans to customers grew 26 percent to 498 billion rupees with leasing vehicles also picking up sharply from 24 to 40 billion rupees.

Alles said car leases have already slowed, but they were seeing a pick-up in housing loans.

With higher salaries to state workers and a planned tax cut, increasing disposable income, there was also greater potential for personal loans.

Chief Operating Officer Dilshan Rodrigo said the bank was expecting 15 percent loan growth in 2016, with corporate loans slowing but SMEs and personal banking segments accelerating.

Margins were better in SME loans but they were the most risky with the highest defaults, he said. Corporate loans where margins were thin, had the lowest defaults, he said.

Personal loans fell in between.

The bank was also seeing growth in its micro lending.

Alles said the bank was gradually boosting its fee based income becoming active in trade services and also digital delivery.

The bank had invested in digital infrastructure and was able to re-deploy staff to sales, keeping overall costs down, Alles said.

The bank's cost-to-income ratio was about 46 percent and they were hoping to bring it down further. Centralized credit approvals had also reduced staff costs, he said.

Sri Lanka bourse launches multilingual web portal for investors

ECONOMYNEXT – The Colombo Stock Exchange (CSE) has launched a multilingual web portal to educate investors on the risks and rewards of investing in equities and other instruments.

“This is a very low cost way of doing it – you can educate yourself at home or anywhere,” CSE chairman Vajira Kulatilaka told a news conference.

“Knowledgeable investors is what we want, people who play the market knowing the risk, not just speculators.”

The web portal www.cse.edu.lk, delivers content in English, Sinhala and Tamil and offers learning material to the public through online courses, free and for a fee, webinars and publications.

Mithila Mendis, chief executive of thinkCube Systems (Pvt) Ltd., the technology firm which developed the portal said it offers services on any device at any time – mobile, tablet, or PC.

“The webinars allow for interaction – you can ask questions,” he said.

Kulatilaka said the portal will be upgrade to offer bourse games where users can build dummy stock portfolios and do mock trading without money before they invest for real.

Fitch downgrades SriLankan Bonds to ‘B+’

Fitch Ratings has downgraded the rating on SriLankan Airlines’s US dollar-denominated government-guaranteed bonds to ‘B+’ from ‘BB-’.

This follows the downgrade of Sri Lanka’s Long-Term Foreign and Local-Currency Issuer Default Ratings to ‘B+’ with a Negative Outlook. The national carrier’s bonds are rated at the same level as SLA’s parent, the state of Sri Lanka, due to the unconditional and irrevocable guarantee provided by the state.

The Sri Lankan sovereign faces increased refinancing risks on account of high upcoming external debt maturities amid the country’s vulnerability to a shift in investor sentiment. Furthermore, the sovereign’s external liquidity position remains strained, reflecting pressure on foreign-exchange reserves.The recent downgrade also reflects deteriorating public finances driven partly by consistently low general government revenues.

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Bank of Ceylon (BoC) posts highest ever profit of Rs. 25 bn

Bank of Ceylon (BoC), has raised the bar by recording the highest ever profit of Rs.25.3 billion, made by a single commercial entity in the country.

This is a 25% growth over the previous year. Post tax profit at Rs. 16.1 billion recorded 19% growth over end 2014.

The BoC Group recorded Rs. 25.5 billion pre-tax profit achieving a 19% increase over the previous year while post tax profit was Rs. 16.2 billion with a 13% increase over 2014. The Group companies contribute 3% to the Group's total assets.

Interest income the main source of income of the Bank increased by 6% during 2015 while interest expense decreased by 4% resulting in a favorable net interest income with 23% growth. General Manager D.M. Gunasekera said: "Our winning team comprises of an experienced, qualified, seasoned and dynamic team, who provide the Bank with a competitive edge in the industry. We are operating in a highly techno driven rapidly changing environment. "The Bank's contribution to the Government by way of dividend and taxes amounted to Rs. 18 billion.

"As the giant in the banking industry we have been contributing to the country's development since our inception. We have funded many Government projects by delivering our fullest support to uplift our county in all aspects. Apart from providing finance base to deliver the Government mandates, BoC plays a major role in financial inclusion in the society by way of micro finance developments,financial entrepreneur development programmes for Small and Medium Enterprises (SMEs), school savings units, through the 625 branch network in the island,"Chairman Ronald Perera said.
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Sri Lankan shares close lower for 3rd day on firms' ratings downgrade

Reuters: Sri Lankan shares fell for a third straight session on Wednesday as a downgrade by Fitch Ratings of some companies that hold dollar bonds hit investor sentiment, traders said, days after the ratings agency downgraded the country's sovereign rating.

Fitch downgraded the ratings of listed firms such as Sri Lanka Telecom Plc, DFCC Bank Plc, and People's Leasing and Finance Plc, while state-owned Bank of Ceylon, National Savings Bank, Sri Lanka Airlines and Sri Lanka Insurance also were brought down by a notch.

The action followed Fitch's downgrade of Sri Lanka's sovereign rating to B-plus from BB-minus on Monday citing increased refinancing risks, significant debt maturities, and weaker public finances.

"The downgrading of institutions which hold dollar bonds are more in line with the sovereign ratings revision," said Shiran Fernando, an analyst at Colombo-based Frontier Research.

"This means foreign investor confidence will be reduced."

Sri Lanka's benchmark share index closed 0.57 percent lower, or down 34.99 points, at 6,078.41, the lowest close since April 10, 2014.

The index remained in oversold territory for the seventh straight session, with the 14-day relative strength index at 19.741 on Wednesday, compared with Tuesday's 21.663, Thomson Reuters data showed.

A level between 70 and 30 indicates the market is neutral.

Yields on treasury bills rose by 42-54 basis points at a weekly auction on Wednesday to a more than two-year high.

Yields on t-bills have risen after the central bank increased key policy rates by 50 basis points last month.

Turnover touched 1.35 billion rupees ($9.34 million) on Wednesday, the highest since Feb. 19 and well above this year's daily average of 721.5 million rupees.

Foreign investors were net buyers for the fourth straight session, purchasing 114.6 million rupees worth of shares on Wednesday.

Shares in conglomerate John Keells Holdings Plc fell 1.65 percent while Carson Cumberbatch Plc fell 4.54 percent and Distilleries Company of Sri Lanka Plc ended 2.27 percent weaker. 

($1 = 144.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Overseas Realty maintains Rs 3 bn profit in 2015

Completing another successful financial year, Overseas Realty (Ceylon) PLC recorded a Group Net Profit of Rs 3 Billion for 2015 despite lower revenue.

Revenue from Property Leasing grew by 11% to Rs 1.96 bn in comparison with last year, with high occupancy levels and higher rentals at the World Trade Center (WTC). The company expects to maintain good occupancy levels during 2016. Revenue from Other Services contributed an increase of 98% to Rs 206 mn. However Revenue from Apartment Sales reduced from Rs 4.3 bn to Rs 0.97 bn with the remaining Sales of Phase 2 being recognized during 2015.

Piling works of Havelock City Phase 3 was completed early 2016 and pilling works of Phase 4 is expected to be completed during 2016. The Sales launch of Phase 3 is planned for March 18, comprising two more residential towers with 304 Luxury Apartments.

The Group Net Asset Value per Share as at December 31, 2015 increased by 5% to Rs 32.22 and the Earnings per Share for the year stood at Rs 3.44. In comparison with last year the profit attributable to Equity Holders of the Parent increased marginally by 1% to Rs 2.99 bn. The company announced a dividend of Rs 1.50 per share for 2015 amounting Rs 1.3 bn.
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Ceylinco Life posts Rs 2.060 bn profit

Ceylinco Life has ended 2015 on a characteristically strong note with total income of Rs 19.89 billion, of which premium income accounted for Rs 13.4 billion, keeping the company at the helm of the life insurance industry for the 12th consecutive year.

The life insurance market leader reports that total income for the 12 months ending December 31, 2015 was up 7 per cent over 2014, while Goss Written Premium improved by a noteworthy 12.16 per cent.

The company recorded net profit of Rs 2.060 billion for the year and transferred Rs 1.8 billion to shareholders.

Investment and other income remained flat at Rs 6.74 billion, an unsurprising result given the interest rates in effect, the company said. However, Ceylinco Life’s investment portfolio increased by a robust 17.35 per cent in value terms to Rs 67.1 billion, while total assets grew by a noteworthy Rs 9.1 billion or 12.9 per cent to Rs 80.2 billion for the review period.

The company’s Life Fund posted net growth of Rs 7.99 billion or 13.31 per cent to reach Rs 68.01 billion at the end of 2015. Ceylinco Life was the fastest company in the local life insurance industry to reach a Life Fund of Rs 60 billion, a feat it achieved in 2014.

“We are happy with these results, particularly because they were achieved in a year of unusual challenges, which we were able to overcome without losing our focus on operational performance,” Ceylinco Life’s Managing Director and CEO Rajkumar Renganathan said.

Ceylinco Life sold 170,007 new policies in 2015 averaging 14,166 a month, which is satisfactory in the context of the conditions that prevailed, particularly the continuing pressure on disposable incomes in many of the target policyholder segments, the company said. Sales of retirement plans grew by 30% per cent in the 12 months reviewed.

Benefits to policyholders totalled Rs 5.9 billion in 2015, a 21.7 per cent improvement over the previous year.

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