Sri Lanka’s DFCC Bank December net up 74-pct

ECONOMYNEXT – Sri Lanka’s DFCC Bank said December 2016 quarter group net profit rose 74 percent to Rs759 million from a year ago, owing to sharp gains in net interest and fee income at bank level although trading gains were lower.

Group interest income rose 3.3 percent to Rs7.2 billion, while interest expenses rose 9.6 percent to Rs4.5 billion, with net interest income falling 5.8 percent to Rs2.68 billion. The group’s net fee and commissions income fell and net gain from trading was sharply lower.

But at bank level, during the December quarter, net interest income increased 48 percent to Rs2,670 million from a year ago, while net fee and commissions income grew by 25 percent to Rs359 million. Net gain from trading fell to Rs25 million in the December quarter of 2016 from Rs92 million the year before.

“Total operating income grew 32 percent during the quarter under review,” the statement said. “A decline of 50 percent in impairment charges quarter to quarter helped further improve the net operating income.”

Quarterly earnings per share were Rs2.86. DFCC Bank shares were last traded at Rs123.70 each.

EPS for the year ended 31 December 2016 were Rs12.88 with annual group net profit at Rs3.4 billion.

“Major contributions for the group performance apart from DFCC Bank came from Acuity Partners (Pvt) Limited, Lindel and NAMAL,” a statement said.

The total assets of the DFCC Bank group grew by 18 percent and stood at Rs291,266 million as at 31 December 2016.

The statement said, after the amalgamation with DFCC Vardhana Bank, DFCC changed its financial year end from 31 March to 31 December, with the results for 2016 relating to the 01.01.2016 to 31.12.2016 period.

As the bank’s performance of the previous period comprised only a nine-month period, the results cannot be directly compared with that of the current year.

Sri Lanka's Commercial Bank net up 25-pct in Dec quarter

ECONOMYNEXT - Profits at Sri Lanka's Commercial Bank of Ceylon rose 25 percent from a year earlier to Rs4.3 billion in the December 2016 quarter, helped by a provision reversal amid an Rs870 million unrealised bond loss, interim accounts showed.

The group reported earnings of Rs4.83 per share for the quarter. For the year to December, Commercial Bank reported earnings of Rs16.24.

Interest income rose 29 percent to Rs22.7 billion, but interest expenses rose at a faster 48 percent to Rs14.0 billion, allowing the bank slowing net interest income at 8.1 percent to Rs8.6 billion.

The bank has a government bond portfolio of Rs204.2 billion, mostly acquired in 2015. Over Rs63 billion of bonds had been transferred from its available-for-sale portfolio to a held-to-maturity portfolio up from Rs37 billion in September.

The bank showed an Rs865 million unrealised loss on bonds for the quarter. The full-year number came down to Rs3.2 billion from Rs6.69 billion.

In the year to December, the group grew its loan book 21 percent to Rs620 billion.

Profits were boosted by an Rs885 million reversal in general loan loss reversal, which resulted in a net Rs237 million reversal compared to a Rs987 million provision last year.

Total assets grew 15 percent to Rs1,020 billion, which were financed with deposits that grew 19 percent to Rs743 billion.

Net assets grew 12 percent to Rs79.8 billion.

Sri Lanka’s NDB December profit down on higher impairment charges, taxes

ECONOMYNEXT – Sri Lanka’s National Development Bank (NDB) said December 2016 quarter group net profit fell 42% to Rs726 million from a year ago with tax costs and provisioning for bad loans sharply higher.

Interest income grew 41% to Rs8.2 billion in the quarter while interest expenses grew 59% to Rs3.7 billion with net interest income up 11% to Rs2.3 billion, according to interim accounts filed with the stock exchange.

Individual impairment charges more than doubled to Rs397 million in the quarter.

Net fee and commission income was lower in the quarter and while net gains from trading grew, gains from investments were sharply lower with other operating income also lower.

Diluted earnings per share for the December quarter were Rs4.40. NDB’s share was last traded at Rs148.90.

EPS for the year ended 31 December 2016 were Rs16.29 with annual group net profit down 24% to Rs2.69 billion although net interest income went up 13% to Rs8.86 billion.

The accounts showed primary dealer Perpetual Treasuries had increased its stake in NDB to 4.45% and was now the seventh largest shareholder.

The top shareholders were Bank of Ceylon, Employees Provident Fund, Rusi Captain, Sri Lanka Insurance Corporation and Sena Yaddehige.

A statement said that while National Development Bank’s core banking operations improved during the year, performance was affected by “one-off specific provisions made for few customers and the higher effective tax rate in 2016 compared to 2015.”

This was partly due to the increase in the financial services VAT rate from 11% to 15%.

NDB group profit was impacted by “lesser than anticipated capital market activities during the year,” it said.

The bank’s sustained a net interest margin (NIM) of 2.64%, which it said was “satisfying, given the tapering interest margins that were experienced across the industry over the year.

“Strategic and focused expansion of the assets and liabilities growth compared to that of lending growth, whilst being conscious of product pricing led to these sustained NII.”

The bank’s total assets base increased by 8% to Rs335 billion in 2016 from Rs 309 billion the year before.

“Asset quality remains high as reflected by a gross non-performing loan ratio (NPL) of 2.63% (2015:2.43%) well within the bank’s consistently low NPL range and also well below the industry average,” the statement said. Net NPL ratio stood at 1.16% as at 31st December 2016.

Customer deposits grew by 10%, crossing the Rs200 billion mark for the first time and reached Rs 204 billion.

NDB said that increasing its CASA (current accounts and savings accounts) ratio - the ratio of deposits in current and saving accounts to total deposits - from its current range of 22% is “a key strategic priority”.

It said this is a “challenge to the industry at large in an increasing interest rate environment, as depositors’ preference largely skews towards time deposits.

“This skewness is further augmented by the considerable interest rate gap that prevails between the savings and time deposits in the Sri Lankan banking and non-banking sphere, which will also pressurize the industry NIMs.”

Sri Lanka to raise at least US$450mn from 3-year loan

ECONOMYNEXT - Sri Lanka will raise at least 450 million dollars from a syndicated loan for which the government has selected 6 banks, a media report said.

Bloomberg Newswires said Bank of Baroda, Deutsche Bank, Indian Bank, Qatar National Bank, SBI, SMBC will arrange the loan.

Last year Sri Lanka raised 700 million dollars from a syndicated loan. Sri Lanka has a 'B+' speculative rating. Fitch has just upgrade the outlook to 'stable' from 'negative'.

Sri Lanka wanted to raise about a billion US dollars from the syndicated loan.

Nestlé Sri Lanka unit December net up 34-pct

ECONOMYNEXT – Nestlé Lanka, the Sri Lankan unit of the food multinational, said December 2016 quarter net profit rose 34 percent to Rs860 million from a year ago.

Sales rose 2 percent to Rs 8.6 billion over the period, according to interim results filed with the stock exchange, but was down from 8.8 billion rupees reported in the September quarter.

“Tax increases resulted in some erosion in the Q4 2016 revenue,” a company statement said.

“The impact of cost increases and taxes was partially mitigated through focus on driving efficiencies across the value chain.”

Earnings per share for the quarter were Rs16.01. Nestlé Lanka shares were last traded at 1,998 rupees.

Sri Lanka Treasuries yields up, lower volumes sold

ECONOMYNEXT - Sri Lanka's 3-month Treasuries yield edged up 10 basis points to 9.32 percent at Wednesday's auction though the only 7.86 billion rupees out of 25.5 billion rupees of securities offered were sold.

The 6-month yield rose 07 basis points to 10.19 percent and the 12-month yield rose 03 basis points o10.58 percent.

The debt office, which is a unit of the Central Bank sold 1.35 billion rupees of 3-month bills, 6.2 billion rupees of 6-month bills and 295 million rupees of 12-month bills.

The 12-month bill yield is far below the 12-month term deposits offered by commercial banks.

Sri Lanka last week rejected an entire bond auction.

Drought hits Sri Lanka mini-hydropower firms

ECONOMYNEXT – Electricity generation by Sri Lanka’s mini-hydropower companies has been sharply reduced by severe drought that also raises the prospect of looming power cuts, according to a new report.

The island’s hydropower capacity, most of which is from large government hydropower reservoirs, is about 40% of total generation but has been halved owing to lack of rain.

“Mini-hydropower plants are not delivering the expected output,” said the ‘Initial Drought Rapid Assessment 2016/2017’ presented on the drought impact Monday organised by the Asia Pacific Alliance for Disaster Management Sri Lanka (A-PAD Sri Lanka).

Mini-hydropower generation is only around 20MW when installed capacity is 400MW, the report said.

It warned that power cuts were looming owing to the ‘double monsoon failure’ that has depleted hydropower generation capacity.

The problem was worsened by the breakdown of part of the Norochcholai coal-fired power plants, which with a total installed capacity of 900MW had been supplying the base load when running at full capacity.

The government has assured the business community that it will not impose power cuts and would buy power from private firms and asked industries with their own generators to produce their own electricity supply.