Fitch affirms ratings of 10 Lankan finance companies

Fitch has affirmed ratings of 10 Sri Lankan finance companies. They are, People’s Leasing & Finance, Central Finance Company, Melsta Regal Finance Ltd, HNB Grameen Finance Limited, LB Finance PLC, Siyapatha Finance, Senkadagala Finance, AMW Capital Leasing and Finance, Singer Finance and Mercantile Investments and Finance. In addition, Fitch assigned Siyapatha’s proposed subordinated debentures an expected rating of ‘BBB+(lka)(EXP)’.

The rating actions follow Fitch’s periodic review of the large and mid-sized finance companies in Sri Lanka.

Fitch expects capitalization in the sector to come under pressure as a result of asset quality pressures stemming from a challenging operating environment and unfavorable weather conditions and declining profitability due to higher funding and credit costs.

Fitch sees that the shift in the business mix of the entities considered in this peer review has become more apparent given the slowdown in the vehicle financing segment following the increase in import tariffs, imposition of lower allowable loan-to-value ratios coupled with a high interest rate environment.

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Car registrations decline

Car registration has declined in June compared to May. However brand new motor cars registration has shown a marginal increase by 6% from 982 in May to1,044 in June. However the small car segment share dropped slightly from 94% to 92.6%.

Financing share for Large cars declined from 37.5% to 26.8%, medium car financing share increased from 25.7% to 30.5%. Small car financing share increased from 58% to 61%. Overall financing share for brand new cars increased from 56% to 59%.

Pre-owned motor cars declined MoM by 4% but increased YoY by 38%. Suzuki performed slightly better owning to the Wagon-R. Medium car segment share for Pre-owned cars declined from 55% in May to 49% in June. Overall financing share for pre-owned cars increased from 49.3% to 53.6%.

Overall premium motor cars observed significant growth from last month, further it has also reached its highest in the year so far.

Brand new premium cars were led by Mercedez Benz(E-Class) and the Audi ( A-6). Used premium cars were led by BMW 5-series and Mercedez Benz E-class.

Electric cars also got a slight relief from its downward trajectory, increasing from 9 in May to 13 in June. SUV’s continued its momentum increasing from 472 in May to 492 in June. Brand new SUV’s were up by 30% MoM while pre-owned SUV’s declined by 3%. No significant changes in Hybrid category. Toyota’s witnessed a decline especially the Axio (from 539 to 493 in June).

Van registrations declined in June, with both Midsize vans’ and mini vans declining. Financing share increased marginally from 69.6% to 71.1%.

3-wheelers continued its upward trajectory, increasing by 12.5% MoM. Financing share increased from 59.7% in May to 63.4% in June. 2-wheelers declined in June by 11.6% MoM. Scooters also observed a decline from 17,783 in May to 14,846 in June.

Financing share for 2-wheelers remained at 71%. No major changes for Pickup registrations from last month.

Meanwhile the registratrion of mini trucks has increased by 12% MoM. Brand new Mini trucks totaled 230 in June in comparison to 197 in May.

Mahindra observed a growth in market share from 16.8% to 20.9%.

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Amana Bank doubles capital, Rights Issue oversubscribed

Amãna Bank was infused with over Rs. 4.75 billion to its capital base, when its shareholders expressed confidence in the Bank resulting in its recent rights issue being oversubscribed.

In doubling its capital, the Bank issued 1,250,695,567 ordinary voting shares in the ratio of one new share for every share held at an issue price of Rs. 3.80 per share. With the fresh capital input, the Bank has comfortably met the statutory capital requirement of Rs. 10 billion, well ahead of the January 2018 timeline. Subscribing to the Rights Issue, IB Growth Fund (IBGF) together with their ultimate parent company Islamic Development Bank (IDB), have increased their shareholding to 29.9% of the Bank, showing strong confidence on the Banks future and the country’s economic progress and future prospects, despite Sri Lanka being a non-member country of the IDB. Commenting on the successful rights issue campaign, the Bank’s Chairman Osman Kassim said “The oversubscription of the Bank’s Rights Issue signifies the confidence our shareholders have in Amãna Bank’s journey and we are really honoured and grateful to have their support and commitment. This capital infusion will take the Bank to greater heights”

Chief Executive Officer Mohamed Azmeer said, “I am very optimistic of our future and look forward to the excitement and challenge as we enter our next phase of growth.”

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NDB records highest ever Profit After Tax of Rs 2.3 bn

National Development Bank PLC (NDB) concluded the first half of the financial year with a record Profit After Tax (PAT) of Rs 2.3 billion (81% growth YOY).

This is the highest recorded PAT for the Bank in its history for the first half of a financial year, which was supported by commendable growth in core banking operations and dividend contributions from Group companies.

The reported growth levels for the Bank’s Profit Before Tax (PBT) of Rs 3,814 million was 70% over the comparative period of H1 2016. It is noteworthy to mention that the PBT and PAT of the Bank, excluding the Group dividends grew impressively by 56% and 63% respectively, which is a clear reflection of the strong performance of the core banking operations.

The Balance Sheet grew by 9% in 6 months and stood at Rs 365 billion. This was supported by the growth in loans and advances to customers which grew by 11%, (by Rs 24.8 billion) and deposits by a notable 17%, (by Rs 35.5 billion), furthering the growth momentum achieved in the first quarter of the year.

The Director, CEO of NDB, Dimantha Seneviratne, sharing his views on the performance of the 1st half, mentioned that the Bank has been able to well maintain the sound growth coming from all the sectors diversifying the core banking income base.

Net interest income (NII) recorded a 17% growth over the corresponding period to Rs 4,746 million. This growth is satisfactory in an environment where the loan book has grown by 11% where further volatility and downward trend in interest rates are noted.

Net fee and commission income grew by 6% in H1 2017 over H1 2016 up to Rs 1,141 million. The Bank envisages stronger growth in net fee and commission income in to the future. Improving the net interest income to net fee and commission ratio up 30:70 ratio is one of the key strategic priorities of the Bank.

Net gains from trading of Rs 533 million grew by 17% in H1 2017 over the comparative period. Other operating income was Rs 1,197 million and included dividend earned from the NDB Group companies.

The total impairment charges for H1 2017 was Rs 581 million, a reduction of 30% compared to H1 2016. The sound credit review and monitoring processes have resulted in reduced impairment charges which are also reflected in an improved Non-Performing Loan ratio (NPL) for H1 2017.

Total operating expenses were kept under close watch with only a 5% increase over the prior period. Managing growth in operating costs, amidst accelerated business growth and inflation is one of the key challenges managed well via structured and focused cost management initiatives, as opposed to cost cuts.

The Bank made encouraging strides in the Balance Sheet (growth of 9%) during the first half of 2017 to reach Rs 365 billion with a quantum growth of Rs 30 billion. Asset growth was supported by the growth in loans to customers by an 11% growth, to close at Rs 252 billion, (by Rs 24.8 billion). its grew by an impressive 17%, (by Rs 35.5 billion).
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Sri Lankan shares hit 6-week closing low

Reuters: Sri Lankan shares closed marginally weaker for a seventh straight session on Tuesday, but analysts expect sentiment to turn positive following cabinet approval for a Chinese-built port.

The Colombo stock index fell 0.03 percent to 6,662.34, marking its lowest close since June 13, and its tenth fall in 11 sessions.

Sri Lanka's cabinet cleared a revised agreement for its Chinese-built southern port of Hambantota on Tuesday which will bring in around 1 billion dollar investment, after terms of the first pact sparked widespread public anger in the island nation.

"With the cabinet approval granted for the port deal and exchange control bill presented to parliament today, we might see some positive sentiment returning to the market," said Dimantha Mathew, head of research, First Capital Holdings

Sri Lanka parliament on Tuesday debated a new exchange control bill.

Foreign investors bought shares worth a net 47.2 million rupees ($307,592.05) on Tuesday, extending the year-to-date net foreign inflow to 25 billion rupees.

Turnover was 359.8 million rupees, well below this year's daily average of around 903 million rupees.

Shares of Ceylon Tobacco Company Plc fell 0.9 percent. 

($1 = 153.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Sri Lankan shares post near 6-week closing low

Reuters: Sri Lankan shares fell for the sixth straight session on Monday to post a near six-week closing low, but brokers said the slide is slowing down.

The Colombo stock index fell just 0.08 percent to 6,664.12, but it marked the lowest close since June 13, and its ninth fall in 10 sessions.

"The market came down over the last few days due to profit taking, but it looks like the profit taking has come to an end and the market is consolidating at these levels," said Dimantha Mathew, head of research, First Capital Holdings.

Foreign investors bought shares worth a net 195.5 million rupees ($1.27 million) on Monday, extending the year-to-date net foreign inflow to 25 billion rupees.

Turnover was 502.6 million rupees, less than this year's daily average of around 907 million rupees.

Shares of Hemas Holdings Plc fell 1.8 percent while Ceylon Cold Stores Plc closed 1.14 percent weaker. 

($1=153.45 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; editing by Neil Fullick)

Sri Lankan shares post over 1-month closing low; blue chips lead

Reuters: Sri Lankan shares fell for an eighth session in nine in thin trade on Friday and posted a more than one-month closing low, with blue chips leading the losers.

The Colombo stock index ended 0.22 percent lower at 6,669.51, its lowest close since June 14, and its fifth straight session of falls.

"The market is bit slowing down and the local interest in the market was short lived," said Dimantha Mathew, head of research, First Capital Holdings.

"The market needs local investors to sustain the positive momentum. Foreign investors continue to buy."

Foreign investors bought shares worth net 6 million rupees ($39,062.50) on Friday, extending the year-to-date net foreign inflow to 24.8 billion rupees worth of equities.

Turnover was 516.8 million rupees, less than this year's daily average of around 914 million rupees.

Shares of market heavyweight John Keells Holdings closed 1 percent weaker and private lender Hatton National Bank fell 1.5 percent. 

($1 = 153.6000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)