Sri Lanka's Bank of Ceylon June net down 39-pct

ECONOMYNEXT - Profits at Sri Lanka's largest bank, state controlled Bank of Ceylon, fell 39 percent from a year earlier to 2.7 billion rupees in the June 2018 quarter, on falling interest margins as deposits grew faster than its loan book and higher bad loans provisioning, interim accounts showed.

Earnings in the six months to end June fell 28 percent to 7.5 billion rupees on net interest income growing 4 percent to 31 billion rupees.

In the June quarter, the bank reported net interest income growth of 1.7 percent to 15.9 billion rupees, as interest income increased 12 percent to 48.5 billion rupees and interest expenses grew a faster 17.7 percent to 32.7 billion rupees.

Interest margins had also contracted to 3.07 percent in the quarter, compared to 3.34 percent a year earlier.

Bank of Ceylon's loan book grew 8.7 percent from a year earlier to 1.24 trillion rupees at end June 2018, while deposits grew a faster 16 percent to 1.63 trillion rupees.

Bad loans provisioning increased 12.3 percent to 5 billion rupees.

Net fee and commission income grew 46 percent to 2.1 billion rupees.

Losses from trading in financial assets fell 57 percent to 488 million rupees.

Operating expenses grew 27 percent to 9.2 billion rupees which includes staff costs amounting to 5.4 billion rupees, a moderate 1.3 percent from a year earlier.

Total assets of the bank rose 11 percent from six months earlier to 2 trillion rupees at end June 2018, while shareholder funds increased 12.5 percent to 126.5 billion rupees.

Tier 1 capital adequacy under Basel III was 10.09 percent, higher than the 8.875 regulatory minimum, but lower than what it was six months earlier at 10.87 percent.

Total capital adequacy was 13.77 percent, higher than the 12.875 regulatory minimum, but was lower than 14.49 percent the bank had achieved six months earlier.

Sri Lanka’s Commercial Bank June net up 10-pct, tax, personnel costs up

ECONOMYNEXT – Net profits at Sri Lanka’s Commercial Bank grew almost 10 percent to 4.2 billion rupees in the June 2018 quarter from a year ago with a sharp rise in tax, personnel and impairment costs and big gains in other income.

Net interest income rose 31 percent to 12.1 billion rupees with interest income up 17 percent while interests costs grew a slower nine percent, according to interim accounts filed with the stock exchange.

Earnings per share for the quarter were 4.20 rupees. The share closed Wednesday at 123.50 rupees, down 50 cents or 0.40%.

The June accounts showed tax costs went up by half along with a sharp rise in personnel costs but with big gains in other income despite trading losses mainly from swap losses and fee and commission income also up sharply.

Tax costs went up 57 percent to 4.2 billion rupees after the removal of most income tax exemptions enjoyed by the banking industry with the introduction of the new Inland Revenue Act.

Personnel costs rose 17 percent to 3.2 billion rupees after a pay hike.

Impairment charges for bad loans shot up 240 percent to 2.4 billion rupees in the June 2018 quarter from the previous year with a huge increase in individual impairment costs.

Other income shot up 924 percent to 2.8 billion rupees despite a 1.4 billion rupee trading loss while fee and commission income rose 26 percent to 2.5 billion rupees.

In the six months to June 2018, diluted EPS went up to 8.52 rupees from 8.26 rupees a year ago.

Commercial Bank said in a statement deposits exceeded 911 billion rupees, growing by over 10 billion a month while the loan book grew over 12 billion rupees a month to reach 829 billion rupees.

Taxes exceeded 7 billion rupees in the first 6 months of 2018 accounting for 45% of pre-tax profit.

Commercial Bank said it was “compelled to make significant provisions for impairment charges for the six months ending 30th June 2018.”

But it also said “timely re-pricing enabled the bank to restrict growth of interest expenses despite a shift towards high cost funds in the six months reviewed.”

Net interest income accounted for 77.35% of the total operating income of the bank.

Commercial Bank Chairman Dharma Dheerasinghe said the bank’s performance reflected its ability to withstand challenges, such as an industry-wide increase in impairment charges, necessitated by the trend of an escalation in non-performing loans (NPLs).

“The bank has been able to maintain its NPL ratios well below industry averages, but we expect the pressure on impairment charges to continue in the year ahead due to slower business growth,” Dheerasinghe said.

Total assets of the bank grew by Rs 56.341 billion or 4.93% over the six months to reach Rs 1.2 trillion as at 30th June 2018.

Total loans and receivables from customers crossed the Rs 800 billion mark in the review period, increasing by Rs 74.083 billion or 9.82% since 31st December 2017 to Rs 828.791 billion at the end of the first half.

The bank’s deposits increased to Rs 911.180 billion in the period reviewed, growing by 7.18% or Rs 61.053 billion since 31st December 2017.

Sri Lanka's Melstacorp June net down 30.8-pct

ECONOMYNEXT - Profits at Sri Lanka's listed conglomerate Melstacorp Plc fell 30.8 percent from a year earlier to 789.3 million rupees in the June 2018 quarter on rising finance costs from a surge in borrowings and losses in telecommunications and lower profits from financial services.

Melstacorp is the parent company of liquor producer listed Distilleries Company of Sri Lanka and other businesses ranging from insurance, plantations, financial services and telecommunications.

Earnings in the quarter amounted to 68 cents a share, according to interim accounts filed with the Colombo Stock Exchange.

The share closed unchanged at 50 rupees Wednesday.

Revenue grew 102 percent to 20.8 billion rupees, cost of sales increased 75 percent to 13.3 billion rupees leading to a 178 percent increase in gross profits of 7.5 billion rupees.

Net finance cost surged 941 percent to 413 million rupees as borrowings increased to 26.7 billion rupees at end June 2018, from 3.6 billion rupees a year earlier.

Administrative expenses ballooned 367.6 percent to 4.6 billion rupees.

-Segment Results-

The group's beverages segment which includes listed Distilleries saw revenue decline 10 percent from a year earlier to 20.8 billion rupees in the June 2018 quarter, but profits grew 31 percent to 1.7 billion rupees.

Telecommunications which includes voice and broadband service provider Lanka Bell saw revenue growing 8 percent to 763 million rupees but losses deepened 22 percent to 437 million rupees.

Financial services which include businesses in insurance (Continental Insurance) reported a 12 percent decline in revenue to 751 million rupees with earnings falling 29 percent to 88 million rupees.

Tea and rubber plantations revenue grew 45 percent to 1.2 billion rupees leading to a 60 percent growth in profits to 40 million rupees.

A segment classified as other which includes a BPO, hotels, logistics, energy, textiles and media saw revenue surge to 11 billion rupees in the June 2018 quarter, up from 485 million rupees a year earlier, with combined profits of 611 million rupees, an increase of 50 percent from a year earlier.

Sri Lanka's Lanka Walltiles group June quarter profit down 72-pct

ECONOMYNEXT – Profit at Sri Lanka's Lanka Walltiles group fell 72% to 47 million rupees in the June 2018 quarter from a year ago, interim financial results filed with the stock exchange showed.

The group reported earnings of 87 cents per share in the quarter, down from 3.12 rupees a year ago. The stock closed unchanged at 79 rupees Tuesday.

The tile manufacturing group, which includes Lanka Tiles, benefits from high import tariffs on tiles which keep construction costs artificially high but still faces stiff competition from cheap imported tiles.

Lanka Walltiles June 2018 sales rose 5.3% to 3.8 billion rupees, cost of sales fell 12% to 2.95 billion rupees, contracting gross profits 12.7% to 853 million rupees, the accounts showed.

Profits from the group’s tile business fell 38%, earnings from packing materials were sharply lower while its plantations and aluminium products businesses made losses.

Group subsidiaries also include Vallibel Plantation Management Limited, Horana Plantations PLC, Uni-Dil Packaging Ltd, Uni-Dil Packaging Solutions Ltd, Swisstek (Ceylon) PLC, and Swisstek Aluminium Ltd.

Profits at subsidiary Lanka Tiles fell 43% to 84 million rupees in the June 2018 quarter from a year ago, interim accounts showed.

Earnings per share were 1.59 rupees. Lanka Tiles share last traded at 91.60 rupees.

Lanka Tiles sales rose 13% to 1.4 billion rupees in the June quarter from the previous year with local sales up by 13% to 1.3 billion rupees and exports up 12% to 64 million rupees.

Sri Lanka's HNB June net up 32-pct

ECONOMYNEXT - Profits at Sri Lanka's listed Hatton National Bank grew 32 percent from a year earlier to 4.5 billion rupees in the June 2018 quarter on improving interest margins and lower bad loan provisioning, interim results showed.

The bank, popularly known as HNB, reported earnings of 18.12 rupees a share, interim results filed with the Colombo Stock Exchange showed.

The share closed unchanged at 220.70 rupees on Wednesday.

Earnings were 18.49 rupees a share in the six months to end June 2018 on a profit of 9.1 billion rupees.

In the June quarter, net interest income grew 14 percent to 12.8 billion rupees as interest income rose 9 percent to 28.1 billion rupees and interest expenses grew a slower 5 percent to 15.3 billion rupees.

The bank's loan book grew 9 percent from six months earlier to 695.7 billion rupees and deposits grew 6 percent to 741.3 billion rupees.

Interest margins improved to 4.49 percent in the quarter, up from 4.25 percent six months earlier.

Bad loans provisioning fell 27 percent from a year earlier to 1 billion rupees in the June quarter.

Fee and commission income rose 6 percent to 2.4 billion rupees.

Trading losses fell 17 percent to 1.1 billion rupees and other operating income rose 34 percent to 1.8 billion rupees.

Net losses on trading increased on account of higher depreciation of the rupee against US dollar from a year earlier, the bank said.

Insurance premium income from a subsidiary HNB insurance rose 17 percent to 1.7 billion rupees.

Personnel costs grew 6 percent to 3 billion rupees and other expenses rose 17 percent to 3 billion rupees.

Gross assets of the bank grew 5 percent to 1 trillion rupees, with equity attributable to shareholders grew 113.2 billion rupees.

Tier 1 capital adequacy was 12.48 percent, compared to the regulatory minimum of 8.875 percent.

Total capital adequacy was 15.22 percent, above the regulatory minimum of 12.875 percent.

"As we move in to the second half of 2018, we are fully cognizant of the macro-economic challenges, slow-down in economic growth and market liquidity constraints," HNB's Chief Executive Jonathan Alles said in a statement.

"These primary challenges and the need for additional capital to meet the enhanced regulatory requirements and taxes, continue to hamper growth in the banking sector.

"As such, we remain optimistic of sustained policy consistency which will create an environment for growth," he said.

Sri Lanka’s 01-yr Treasury Bill yield falls to 9-pct

ECONOMYNEXT – Sri Lankan Treasury Bill yields fell across maturities at an auction Wednesday with the 01-year bill yield falling 16 basis points to 9.00 percent from last week, data from the Public Debt Department of the central bank showed.

It raised 11 billion rupees from 01-year bills, the exact amount offered, after getting bids worth almost 56 billion rupees.

The 03-month bill yield fell 06 basis point to 8.10 percent while the 06-month bill yield fell 08 basis points to 8.62 percent.

The debt office raised 20 billion rupees from all tenors, the same amount offered, having got bids worth 84 billion rupees.

Sri Lanka's Union Assurance June quarter profits surge 349-pct

ECONOMYNEXT - Profits at Sri Lanka's listed Union Assurance surged 349 percent from a year earlier to 300.2 million rupees in the June 2018 quarter on rising revenue and lower costs, interim results showed.

The company specializes in long term, or life, insurance, reporting earnings of 5.09 rupees a share in the June quarter, interim results filed with the Colombo Stock Exchange showed.

Earnings for the six months to end June 2018 was 10.25 rupees a share on profits of 604 million rupees, up 245 percent from a year earlier. During the premium, gross premium incomes growing 12 percent from a year earlier to 5.2 billion rupees and investment income growing 16 percent to 2 billion rupees.

Union Assurance was trading 3.60 rupees higher on Wednesday at 280 rupees.

In the June quarter, gross written premium income rose 13 percent from a year earlier to 2.6 billion rupees, with reinsurance costs rising 13 percent to 138 million rupees, leading to net written premiums growing 13 percent to 2.5 billion rupees.

Profit from operations grew 495 percent to 278.8 million rupees as net losses from changes to contract liabilities in the life fund fell 53 percent to 1 billion rupees.

Net claims and insurance benefits paid rose 88 percent to 792.2 million rupees and underwriting and acquisition costs grew 37 percent to 542.3 million rupees.

Operating and administrative costs rose 57 percent to 809 million rupees

The company did not report any income tax expenses having carried forward taxable losses from the previous financial year, the company said.

The Inland Revenue Department has raised an income tax assessment of 832 million rupees for the 2015/16 financial year along with a 50 percent fine, which totals 1.3 billion rupees.

"Directors are of the view that it has followed due process and acted in accordance with the prevailing laws in its tax submission and therefore, the above assessments have no rationale or basis in law," the company said in the notes to the interim results.

Union Assurance's life fund was worth 35.4 billion rupees at end June 2018, down from 39.5 billion rupees six months earlier due to the falling value of financial investments to 29.6 billion rupees from 34.5 billion rupees.

Gross assets increased to 44.5 billion rupees at end June 2018, up from 43 billion rupees six months earlier.

Net Assets fell to 11.4 billion rupees from 11.9 billion rupees.