Sri Lanka’s Cargills gets ok for banking counters at all supermarkets

ECONOMYNEXT – Sri Lanka’s Cargills Bank, owned by the Cargills group, has got regulatory approval to operate banking counters at all its Food City supermarkets islandwide, helping it keep costs low.

The bank’s chairman Louis Page said a key competitive advantage of Cargills Bank centred on the retail network of over 350 Cargills Food City outlets spread across the length and breadth of the country.

“The Cargills outlets offer banking customers convenience with low overhead for the bank,” he said in the bank’s annual report for 2017 which was just released.

The bank is converting Cargills Food City (CFC) cashier counters to banking counters.

“During the year the bank was able to obtain approval for all its CFC outlets to operate as banking agencies,” the report said.

The year under review saw the opening of 3 new branches in Wattala, Ratnapura and Kaduruwela in September, October and December.

The report said that with technology being a strategic priority, Cargills Bank has been able to enable the deposit and withdrawal of funds 365 days of the year, from 8 am to 11 pm., by converting supermarket checkouts to simple but versatile banking counters.

“This complements the bank’s ability to compete in a non-traditional banking space where there is much untapped potential amongst hitherto excluded segments and the SME sector of the country.”

Cargills Bank said it will increase investments and focus on electronic and mobile banking channels to augment the extensive retail banking channels at CFC and carve out a niche by serving the underbanked and offering the best in customer convenience.

“Our unique retail and SME- focused and technology- led model, with the aim of offering customers new paradigms in convenience and speed of service, is based on an “Operational Expenditure model” rather than a Capital Expenditure based one,” it said.

“This approach places us on a firmer foundation of lower costs with greater agility and nimbleness to adapt to rapidly evolving technology.”

Sri Lanka Telecom sees data revenue growing, margins falling

ECONOMYNEXT – Sri Lanka Telecom said broadband data will dominate revenue despite thinning margins and rising capital expenditure with the telco developing its own over-the-top (OTT) platforms for voice, audio, picture and video messaging services like WhatsApp and Viber.

SLT has invested over 70 billion rupees over the last two years to expand a fibre optic network for faster broadband.

"In terms of the telco industry, growth will focus on broadband-related digital services. Broadband revenues will dominate the income statement within the next three years," SLT Chairman Kumarasinghe Sirisena told shareholders in the company's 2017 annual report.

However, the fibre network with broadband speeds up to 100Mbps will boost third party OTT consumption eating into SLT's own traditional voice and messaging revenue.

"The year 2017 was another turbulent year for the global and local telecommunication industry as revenue from IDD and other traditional avenues declined due to the threat from OTT players," SLT said in its 2017 annual report.

Also, "margins from data are decreasing while the capital expenditure in infrastructure is on the rise," it said.

However, the telco said it doesn't see OTT's as a threat.

"The usage boosted by OTT consumption will fill up the broadband 'pipes', thereby contributing towards better return on investment," the telco said, adding that it would develop its own OTT platforms.

In 2017, revenue from broadband and 'data and other services' was 27 billion rupees at company level, accounting for nearly 60 percent of total revenue of 44.5 billion rupees.

The share of broadband and 'data and other services' to revenue was 38% percent in 2012.

SLT has connected 315 government establishments to the fibre optic network, and will add 545 more by the end of 2018.

It has also connected 2 million homes to the fibre network by the end of 2017 both in terms of fixed and mobile broadband.

SLT also provides IPTV on both its copper and fibre network.

Sri Lankan stocks slip as investors sell select blue chips

Reuters: Sri Lankan share index slipped on Thursday from a five-week closing high hit the previous day, snapping a six-session winning streak, as investors offloaded select blue-chip stocks in low volumes.

Many market participants stayed away due to extended holidays after the Sinhala-Tamil New Year festival last weekend, brokers said.

The Colombo stock index ended 0.36 percent weaker at 6,528.57, slipping from its highest close since March 13 hit on Wednesday. The index gained 0.44 percent last week.

“Market came down on blue-chip selling in low volumes,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings PLC.

“Just 159 shares of Ceylon Tobacco Co (CTC) were traded. The small volume of selling in CTC dragged the market down,” he added.

Turnover stood at 269.8 million rupees ($1.73 million), less than a quarter of this year’s daily average of 1.11 billion rupees.

Shares of Ceylon Tobacco ended 2.5 percent weaker, while Lanka ORIX Leasing Company Plc closed 2.2 percent down and Melstacorp Ltd closed 1.00 percent lower.

The market has been waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors bought shares worth a net 57.1 million rupees on Thursday, but they have net sold 1.27 billion rupees worth of equities so far this year.

The central bank unexpectedly cut its key lending rate by 25 basis points early this month, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

($1 = 156.1500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips)

Sri Lankan stocks extend gains, hit 5-week closing high

Reuters: Sri Lankan share index ended at its highest close in more than five weeks on Wednesday, gaining for a sixth straight session, but many market participants stayed away due to extended holidays after the Sinhala-Tamil New Year festival last weekend.

The Colombo stock index ended 0.12 percent higher at 6,551.83, its highest close since March 13. The index gained 0.44 percent last week.

Turnover stood at 188.3 million rupees ($1.21 million), well below this year’s daily average of 1.13 billion rupees.

“The turnover level was very low with most investors still on holiday. The index, however, is up on blue-chip buying in low volumes,” said Atchuthan Srirangan, assistant manager - research, First Capital Holdings PLC.

Shares of Ceylon Tobacco Company Plc ended 2.8 percent higher, while the biggest listed lender Commercial Bank of Ceylon Plc closed up 1.1 percent, conglomerate John Keells Holdings Plc closed 0.4 percent higher.

The market was waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors bought shares worth a net 24.3 million rupees on Wednesday, but they have net sold 1.33 billion rupees worth of equities so far this year.

The central bank unexpectedly cut its key lending rate by 25 basis points early this month, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty.

($1 = 156.2500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez, Editing by Sherry Jacob-Phillips

Sri Lanka car registrations up in March, Wagon-R leads

ECONOMYNEXT - Sri Lanka's vehicle purchases rose 6.5 percent in March 2018 from a year earlier, with car registration up 107 percent to 5,968 units with Suzuki Wagon-R becoming the market leader after a tax change, an analysis of vehicle registry data shows.

In March 2,380 Wagon-Rs were registered up from only 626 a year earlier, JB Securities, a Colombo-based equities brokerage said.

Indian-made Maruti vehicles were market leaders before Mercantilist crackdown on car imports after the central bank triggered a balance of payments crisis by printing money in 2015 and 2016. A recent tax change made Wagon-Rs more affordable.

"Maruti Alto recorded 17 units in the month, as a point of reference in Sep 2015 there were 7,556 units registered – another case of how government policy can tilt the playing field so precipitously," JP Securities said in a note to clients.

"Under the unit method of duty the taxes on a 660 cc hybrid engine found on most Japanese small cars is LKR 825,000, on an 800cc Alto it is LKR 1.4 million although the landed price of the former is probably 50% less."

Sri Lanka's politicians and bureaucrats, who get tax free and tax slashed cars also cracked down on three wheeler's raising taxes and squeezing credit in the wake of the money printing bout, denying mobility to lower income segments in another vicious intervention, freedom advocates say.

Three wheeler registrations were down 54 percent to 1,525 units in March 2018.

Before the crackdown by Sri Lanka's rulers, people imported between 6,000 to 10,000 three-wheeler units a months. In rural areas the three-wheeler is a the only public transport available.

They were also used by craftsmen like carpenters and masons as personal transport, and small business owners until the crackdown.

Sri Lankan shares hit 5-week closing high in thin trade

Reuters: Sri Lankan shares hit a five-week closing high in thin trade on Tuesday, rising for a fifth straight session, as many market participants stayed away due to extended holidays after the Sinhala-Tamil New Year festival over the weekend, brokers said.

The Colombo stock index ended 0.74 percent higher at 6,544.25, its highest close since March 13. The index gained 0.44 percent last week.

Shares of Distilleries Company of Sri Lanka Plc rose 10.2 percent, while Melstacorp Ltd ended 1 percent higher. Ceylinco Insurance Plc rose 5.2 percent, while fixed line telephone operator Sri Lanka Telecom Plc closed 2.2 percent firmer.

Turnover stood at 315.4 million rupees ($2.02 million), less than this year’s daily average of 1.13 billion rupees.

“Market is up on low volumes. Lack of investors in the market resulted in the low volumes, most investors are on holidays and not active still,” said Dimantha Mathew, head of research, First Capital Holdings.

The market was waiting for some political stability after President Maithripala Sirisena suspended parliament until May 8, brokers said.

Foreign investors bought shares worth a net 9.5 million rupees on Tuesday, but they have net sold 1.36 billion rupees worth of equities so far this year.

The central bank unexpectedly cut its key lending rate by 25 basis points last week, as policy makers sought to revitalise an economy growing at its weakest pace in 16 years and facing heightened political uncertainty. 

($1 = 156.2000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Biju Dwarakanath)

Sri Lanka Nations Trust Bank, SLT, People's Leasing debt issues oversubscribed

ECONOMYNEXT - Sri Lanka's Nations Trust Bank said its 3.5 billion Basel-III-compliant debenture issue was oversubscribed on opening day last Wednesday (11).

Sri Lanka Telecom and finance company People's Leasing and Finance Plc which also opened debenture issues Wednesday, closed the same day after being oversubscribed.

Sri Lanka Telecom said it raised 7 billion rupees and People's Leasing and Finance said it collected 6 billion rupees.

Nations Trust Bank's five-year debentures have a 12.65 percent coupon rate paid every six months or 13 percent interest paid annually.

People's Leasing debentures comprise tenures of four and five years. The four year debenture carries a coupon rate of 12.40 percent and the five year debenture 12.80 percent.

Sri Lanka's Telecom's 10-year debentures have a 12.75 percent coupon rate.

Four year risk-free government bonds closed 9.60/65 in two-way quotes Thursday, a five year bond was quoted at 9.75/85. Ten-year bonds were quoted at 10.10/15, according to Wealth Trust Securities.

Nations Trust last traded at 80.10 rupees, Sri Lanka Telecom at 28.70 rupees and People's Leasing at 15.80 rupees.