Sri Lankan shares slip from 3-month closing high

Reuters: Sri Lankan shares closed slightly weaker on Monday after posting a three-month closing high in the previous session as investors booked profit in beverage and telecom stocks.

The benchmark Colombo stock index ended 0.12 percent, or 7.65 points, weaker at 6,594.59, after adding 1.23 percent last week in its third straight weekly gain.

"The market came down on a bit of profit-taking," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd, adding that the market might continue to be bullish with no big risks of huge downturn.

Turnover stood at 643.9 million rupees ($4.43 million), less than this year's daily average of around 743.2 million rupees.

Foreign investors bought a net 48.6 million rupees worth of shares, extending the net foreign inflow so far this month to 1.43 billion rupees worth of equities.

They are, however, net sellers of 3.22 billion rupees worth of shares so far this year.

Shares of Ceylon Tobacco Company Plc fell 1.96 percent, while Ceylon Cold Stores Plc dropped 1.38 percent and Distilleries Company of Sri Lanka Plc declined 1.10 percent.

Shares in Dialog Axiata Plc fell 0.86 percent. 

($1 = 145.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lankan stocks hit 3-mth closing high led by banks, construction shares

Reuters: Sri Lankan shares hit a three-month closing high on Friday as investors bought banking and construction stocks, brokers said.

Construction shares have been rising ever since the government gave its consent to restart a $1.4 billion port city deal on hopes the sector would see a boom, brokers said.

Sri Lanka's government on Aug.12 agreed on a new version of its $1.4 billion real estate agreement with China after changing the terms and blocking the outright sale of land - part of a project covering a square mile right next to the capital's port.

The benchmark Colombo stock index ended 0.14 percent higher, or 8.99 points, at 6,602.24, its highest close since May 20.

The index rose 1.23 percent this week, its third straight week of gains.

"Today the market is up on the bullish buying interest in the construction sector," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

"There could be some profit-taking but we don't see huge downside, with investor confidence improving on the overall economy."

Turnover stood at 1.45 billion rupees ($9.97 million), nearly double this year's daily average of around 743.8 million rupees.

Foreign investors net sold 265.9 million rupees worth of shares on Friday, extending the year to date net foreign outflow to 3.27 billion ($20.63 million) worth equities.

They have however net bought 1.38 billion rupees worth of shares so far this month.

Shares of Dialog Axiata Plc jumped 2.65 percent, while Access Engineering Plc rose 2.81 percent and DFCC Bank Plc climbed 2.26 percent. 

($1 = 145.4500 Sri Lankan rupees) 

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

Fitch downgrades NDB, affirms 8 banks, revises outlook on DFCC, Sampath

(Correction: This announcement replaces the version published on 22 June 2016 to correct the Support Rating of DFCC Bank PLC to ‘5’ instead of ‘4’ and the rating action on the Support Rating to “downgrade” instead of “affirmed”)

Aug 19, 2016 (LBO) – Fitch Ratings says it has downgraded Sri Lanka’s National Development Bank PLC’s (NDB) National Long-Term Rating to ‘A+(lka)’ from ‘AA-(lka)’.

The ratings on eight other Sri Lanka banks have been affirmed. The agency also revised the Outlook on DFCC Bank PLC’s (DFCC) and Sampath Bank PLC’s (Sampath) National Long-Term Ratings to Negative.

The rating actions follow Fitch’s periodic review of the large banks peer group. Fitch has downgraded its assessment of Sri Lankan banks’ operating environment to ‘b+’ from ‘bb-‘ and assigned a negative outlook.

“Fitch believes operating conditions have become more challenging – as signaled by the downgrade of the sovereign rating to ‘B+’ from ‘BB-‘ in February 2016 – and expects increased volatility to add pressure on the banks’ credit metrics,” a statement said.

However, Fitch said it maintains a stable outlook for the Sri Lankan banking sector for 2016, as a material deterioration in the sector’s credit profile is not expected in the short-term.

Fitch believes the underlying operating conditions supporting sector performance are likely to remain intact and pressure on the economic environment is likely to be contained through tighter monetary policy.

The full statement is below:

Fitch Ratings-Singapore/Colombo-18 August 2016: This announcement replaces the version published on 22 June 2016 to correct the Support Rating of DFCC Bank PLC to ‘5’ instead of ‘4’ and the rating action on the Support Rating to “downgrade” instead of “affirmed”.

Fitch Ratings has downgraded National Development Bank PLC’s (NDB) National Long-Term Rating to ‘A+(lka)’ from ‘AA-(lka)’. The ratings on eight other Sri Lanka banks have been affirmed. The agency also revised the Outlook on DFCC Bank PLC’s (DFCC) and Sampath Bank PLC’s (Sampath) National Long-Term Ratings to Negative.

The Long-Term Issuer Default Ratings (IDRs) on National Savings Bank (NSB) and Bank of Ceylon (Bank of Ceylon) have been affirmed at ‘B+’ and their National Long-Term Ratings have been affirmed at ‘AAA(lka)’ and ‘AA+(lka)’, respectively. The Outlooks on the IDRs of NSB and Bank of Ceylon have been maintained at Negative while the Outlooks on their National Long-Term Ratings have been maintained at Stable. Fitch has also affirmed the National Long-Term Rating of People’s Bank (Sri Lanka) (People’s Bank) at ‘AA+(lka)’ with a Stable Outlook.

Furthermore, Fitch has affirmed the National Long-Term Rating of Commercial Bank of Ceylon PLC (CB) at ‘AA(lka)’, Hatton National Bank PLC (HNB) at ‘AA-(lka)’, and Seylan Bank PLC (Seylan) at ‘A-(lka)’.

DFCC’s Support Rating Floor (SRF) was revised to ‘B-‘ from ‘B’.

A full list of rating actions is included at the end of this rating action commentary.

KEY RATING DRIVERS

IDRS, NATIONAL RATINGS AND SENIOR DEBT

The rating actions follow Fitch’s periodic review of the large banks peer group.

Fitch downgraded its assessment of Sri Lankan banks’ operating environment to ‘b+’ from ‘bb-‘ and assigned a negative outlook. Fitch believes operating conditions have become more challenging – as signalled by the downgrade of the sovereign rating to ‘B+’ from ‘BB-‘ in February 2016 – and expects increased volatility to add pressure on the banks’ credit metrics.

However, Fitch maintains a stable outlook for the Sri Lankan banking sector for 2016, as a material deterioration in the sector’s credit profile is not expected in the short-term. Fitch believes the underlying operating conditions supporting sector performance are likely to remain intact and pressure on the economic environment is likely to be contained through tighter monetary policy.

The operating environment is a key rating driver for the Sri Lankan banking sector. It constrains the Viability Rating (VR) of some banks, as it is rare for a VR to be assigned significantly above the sovereign rating, however well banks score on other factors.

Banks With Long-Term Ratings Driven by Sovereign-Support

The IDRs and National Long-Term Ratings of NSB and Bank of Ceylon, and the National Long-Term Rating of People’s Bank, reflect Fitch’s expectation of extraordinary support from the sovereign (B+/Negative).

Fitch believes state support for NSB stems from its policy mandate of mobilising retail savings and primarily investing them in government securities. The National Savings Bank Act contains an explicit deposit guarantee and Fitch is of the view that the authorities would support, in case of need, the bank’s depositors and senior unsecured creditors to maintain confidence and systemic stability. Fitch has not assigned a VR to NSB, as it is considered to be a policy bank.

Fitch expects support for Bank of Ceylon and People’s Bank to stem from their high systemic importance, quasi-sovereign status, role as key lenders to the government and full state-ownership.

The Negative Outlook on Bank of Ceylon’s and NSB’s IDRs reflect the Negative Outlook on the sovereign’s rating. The Outlook on Bank of Ceylon’s, NSB’s and People’s Bank’s National Long-Term Ratings is Stable as their national ratings reflect the banks’ creditworthiness relative to the best credit in Sri Lanka. The ratings of Bank of Ceylon, NSB and People’s Bank are unlikely to be affected unless Fitch’s expectations of sovereign support change.

The US Dollar senior unsecured notes issued by NSB and Bank of Ceylon are rated at the same level as the banks’ Long-Term Foreign-Currency IDRs, as the notes rank equally with other senior unsecured obligations. The notes have a Recovery Rating of ‘RR4’.

Bank of Ceylon’s VR reflects its thin capitalisation and weak asset quality. This is counterbalanced by its strong domestic funding franchise, which is underpinned by its state linkages. Fitch considers state support as Bank of Ceylon’s primary rating driver, even though its VR is at the same level as its SRF.

The National Long-Term Rating of Seylan reflects Fitch’s expectation of state support due to its state shareholding, which came about in the aftermath of the bank’s crisis in December 2008, and higher share of banking sector deposits relative to some peers. Seylan has a lower support-driven rating due to its smaller market share compared with larger peers. Fitch believes Seylan’s standalone financial strength has improved, reaching the same level as it support-driven rating.

Seylan’s senior debt is rated at the same level as its National Long-Term Rating, as the debentures rank equally with other senior unsecured obligations.

Banks With Long-Term Ratings Driven by Intrinsic Strength

The downgrade of NDB’s National Long-Term Rating reflects the decline in its capitalisation alongside continued strong loan growth, and weaker profitability. Fitch’s expectation that the bank’s higher risk appetite could dilute the benefit of a capital infusion has been incorporated in the rating action. NDB’s ratings reflect its satisfactory asset quality, weaker franchise and lower capitalisation relative to higher-rated peers.

The Outlook on DFCC’s National Long-Term Rating has been revised to Negative to reflect weakening capital buffers that stem from weaker asset quality metrics, increased loan growth and below-average internal capital generation. The Negative Outlook on DFCC’s IDR reflects Fitch’s approach of generally capping bank ratings at the sovereign rating level. This is because of the likely adverse impact on the bank’s credit profile from the sovereign’s deteriorating credit profile and increasing risks in the domestic operating environment. DFCC’s VR captures its developing commercial banking franchise and still-high capitalisation. Its weaker asset quality compared with better-rated peers weighs on its rating.

DFCC’s US dollar notes are rated at the same level as its Long-Term Foreign-Currency IDR. The notes have a Recovery Rating of ‘RR4′. DFCC’s Sri Lanka rupee-denominated senior debt is rated at the same level as its National Long-Term Rating, as the debentures rank equally with other senior unsecured obligations.

Sampath’s Outlook has been revised to Negative as Fitch expects the bank’s capitalisation to worsen beyond previous expectations. Fitch does not believe Sampath can sustain its capitalisation purely through retained earnings. The bank’s ratings reflect its lower capitalisation and higher risk appetite relative to peers, which counterbalance its satisfactory asset quality and improving franchise. The bank’s regulatory Tier 1 capital-adequacy ratio continued to deteriorate and stood at 7.6% by end-March 2016 (end-2015: 8%; end-2014: 9%).

The National Long-Term Rating of CB reflects its measured risk appetite relative to peers, strong funding profile, solid domestic franchise and sound performance. The ratings reflect Fitch’s expectation that its non-domestic operations will remain small.

The National Long-Term Rating of HNB reflects its strong domestic franchise, satisfactory capitalisation and strong performance, counterbalanced by a higher risk appetite as seen through sustained high loan growth that has put pressure on its funding and liquidity profile. HNB’s senior debentures carry the same rating, as they rank equal with other unsecured obligations.

SUPPORT RATING AND SUPPORT RATING FLOOR

The SRs and SRFs of privately owned DFCC reflect its relative lower systemic importance, in Fitch’s view.

The SR and SRFs of NSB and Bank of Ceylon reflect the state’s ability and propensity to provide support to the banks given their high importance to the government and high systemic importance.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

NDB’s, DFCC’s, Sampath’s, Bank of Ceylon’s, Seylan’s, CB’s and HNB’s old-style Basel II Sri Lanka rupee-denominated subordinated debt is rated one notch below their National Long-Term Ratings to reflect the subordination to senior unsecured creditors.

RATING SENSITIVITIES

IDRS, NATIONAL RATINGS AND SENIOR DEBT

The banks’ credit profiles are sensitive to changes in the operating environment. Fitch may take negative rating action if the banks’ appetite for risk-taking and pressure on key credit metrics increases amid challenging operating conditions that raises capital impairment risks which are not counterbalanced through adequate capital buffers. Fitch may take positive rating action if stronger risk management and higher capital buffers enhance the resilience of the banks’ balance sheets, but this is only likely to happen in the medium term.

Banks With Long-Term Ratings Driven by Sovereign Support

Any change in the sovereign rating or perception of state support to NSB, Bank of Ceylon and People’s Bank could result in a change in their SRFs. Fitch may downgrade NSB’s National Long-Term Rating if there is a reduced expectation of state support through, for instance, the removal of preferential support, or a substantial change in its policy role or deviation from mandated core activities indicating its reduced importance to the government. A downgrade of Bank of Ceylon’s IDRs will only result from a downgrade of its VR and SRF. Visible demonstration of preferential support for Bank of Ceylon and People’s Bank in the form of an explicit guarantee may be instrumental to an upgrade of their National Long-Term Ratings.

NSB’s and Bank of Ceylon’s senior debt ratings are sensitive to changes in the banks’ Long-Term IDRs. The Recovery Ratings of NSB and Bank of Ceylon are sensitive to Fitch’s assessment of potential recoveries for creditors in case of default or non-performance.

Bank of Ceylon’s VR may come under pressure if there is a continued decline in capitalisation through a surge in lending or further decline in asset quality alongside high dividend payouts. Further deterioration in the operating environment reflected in a decline in Bank of Ceylon’s key credit metrics could negatively affect its VR.

A downgrade of Seylan’s rating could result from a reassessment of state support and a material reversal in recent improvements to its asset quality, together with a weakening financial profile. In the absence of changes to Fitch’s support assessment, an upgrade of Seylan’s rating would be contingent on further improvements in its standalone profile through improved asset quality and provisioning, mainly stemming from recovery of legacy NPLs. Seylan should also maintain other credit metrics in line with higher-rated peers to warrant an upgrade.

Seylan’s senior debt ratings will move in tandem with its National Long-Term Rating.

Banks with Long-Term Ratings Driven by Intrinsic Strength

NDB’s National Long-Term Rating may be downgraded if the bank is not able to sustain its capitalisation at a level commensurate with its risk profile. Drivers for an upgrade are the quantum of a potential capital injection and its sensible deployment alongside the sustainability of a sufficient capital buffer to counterbalance weaknesses in NDB’s credit profile. Fitch does not see upside potential for NDB’s ratings in the near term, as the bank is likely to face difficulty sustaining a capital buffer in line with higher-rated peers due to its higher risk appetite and operating environment-related risks.

The Outlook on DFCC’s National Long-Term Rating may be revised to Stable if the bank can sustain capital buffers to sufficiently cushion its weaker asset quality amid higher operating environment-related risks and counterbalance its developing franchise relative to more established peers. Fitch expects project finance to remain integral to the bank’s business and, as such, expects the bank to maintain higher capitalisation to offset the higher risk of this business.

DFCC’s IDRs and National Long-Term Rating could be downgraded if there is a sustained deterioration in its capitalisation or further weakening of the operating environment. DFCC’s RR is sensitive to Fitch’s assessment of potential recoveries for creditors in case of default or non-performance.

A downgrade of Sampath’s National Long-Term Rating could result from a sustained decline in capitalisation, further increase in risk-taking or a sharp decline in asset quality. Fitch would revise Sampath’s Outlook to Stable if there is a capital infusion and the bank maintains sufficient capital buffers commensurate with its risk profile and operating environment-related risks.

Enhanced resilience against a volatile operating environment could be positive for CB’s National Long-Term rating. The bank’s ratings could be downgraded if its ability to withstand cyclical asset-quality deterioration declines due to lower earnings and capitalisation. In addition, any marked weakening in its deposit franchise and deviation from its measured risk appetite, both viewed by Fitch as key factors that differentiate CB from its lower-rated peers, would be negative.

An upgrade of HNB’s National Long-Term Rating is contingent on the bank achieving sustained improvements in its financial profile, in particular in terms of its funding, and a moderation of its risk appetite. A rating downgrade could result from a significant increase in risk-taking and operating environment-related risks, unless sufficiently mitigated through capital and financial performance. Further weakening of HNB’s liquidity position could also negatively affect its rating.

SUPPORT RATING AND SUPPORT RATING FLOOR

Reduced propensity of the government to support systemically important banks could result in a downgrade in the assigned SRs and SRFs, but Fitch sees this to be unlikely in the medium-term. A change in the sovereign’s ratings could also lead to a change in the SRs and SRFs of the banks.

SUBORDINATED DEBT

Subordinated debt ratings will move in tandem with the banks’ National Long-Term Ratings.

FULL LIST OF RATING ACTIONS

The rating actions are as follows:

National Development Bank PLC:

National Long-Term Rating downgraded to ‘A+(lka)’ from ‘AA-(lka)’; Stable Outlook
Basel II compliant subordinated debentures downgraded to ‘A(lka)’ from ‘A+(lka)’

DFCC Bank PLC:

Long-Term Foreign-Currency IDR affirmed at ‘B+’; Negative Outlook
Long-Term Local-Currency IDR affirmed at ‘B+’; Negative Outlook
Short-Term Foreign-Currency IDR affirmed at ‘B’
National Long-Term Rating affirmed at ‘AA-(lka)’; Outlook revised to Negative from Stable
Viability Rating affirmed at ‘b+’
Support Rating downgraded to ‘5’ from ‘4’
Support Rating Floor revised to ‘B-‘ from ‘B’
US dollar senior, unsecured notes affirmed at ‘B+’; Recovery Rating at ‘RR4’
Sri Lanka rupee-denominated senior unsecured debentures affirmed at ‘AA-(lka)’
Basel II compliant Sri Lanka rupee-denominated subordinated debentures affirmed at ‘A+(lka)’

Sampath Bank PLC:

National Long-Term Rating affirmed at ‘A+(lka)’; Outlook revised to Negative from Stable
Basel II compliant outstanding subordinated debentures affirmed at ‘A(lka)’

National Savings Bank:

Long-Term Foreign-Currency IDR affirmed at ‘B+’; Negative Outlook
Long-Term Local Currency IDR affirmed at ‘B+’; Negative Outlook
Short-Term Foreign-Currency IDR affirmed at ‘B’
National Long-Term Rating affirmed at ‘AAA(lka)’; Stable Outlook
Support Rating affirmed at ‘4’
Support Rating Floor affirmed at ‘B+’
US dollar senior unsecured notes affirmed at ‘B+’; Recovery Rating at ‘RR4’

Bank of Ceylon:

Long-Term Foreign-Currency IDR affirmed at ‘B+’; Negative Outlook
Long-Term Local-Currency IDR affirmed at ‘B+’; Negative Outlook
Short-Term Foreign-Currency IDR affirmed at ‘B’
National Long-Term Rating affirmed at ‘AA+(lka)’; Stable Outlook
Viability Rating affirmed at ‘b+’
Support Rating affirmed at ‘4’
Support Rating Floor affirmed at ‘B+’
US dollar senior unsecured notes affirmed at ‘B+’; Recovery Rating at ‘RR4’
Basel II compliant Sri Lanka rupee-denominated subordinated debentures affirmed at ‘AA(lka)’

People’s Bank (Sri Lanka):

National Long-Term Rating affirmed at ‘AA+(lka)’; Outlook Stable

Seylan Bank PLC:

National Long-Term Rating affirmed at ‘A-(lka)’; Stable Outlook
Sri Lanka rupee-denominated senior unsecured debentures affirmed at ‘A-(lka)’
Basel II compliant subordinated debentures affirmed at ‘BBB+(lka)’

Commercial Bank of Ceylon PLC:

National Long-Term Rating affirmed at ‘AA(lka)’; Stable Outlook
Basel II compliant outstanding subordinated debentures affirmed at ‘AA-(lka)’

Hatton National Bank PLC:

National Long-Term Rating affirmed at ‘AA-(lka)’; Stable Outlook
Sri Lanka rupee-denominated senior unsecured debentures affirmed at ‘AA-(lka)’
Basel II compliant outstanding subordinated debentures affirmed at ‘A+(lka)’

Sri Lankan shares post 3-mth closing high, led by blue chips

Reuters: Sri Lankan shares posted a three-month closing high on Thursday, led by gains in blue chips such as John Keells Holdings Plc and Ceylon Tobacco Company Plc, while foreign investor buying also boosted sentiment.

The benchmark Colombo stock index ended 0.23 percent, or 15.30 points, firmer at 6,593.25, its highest close since May 20.

Foreign investors, who have been net sellers of 3 billion rupees ($20.63 million) of shares this year, bought a net 343.2 million rupees in their highest purchase since Aug. 1, extending the net foreign inflow in the past 16 sessions to 1.8 billion rupees worth of equities.

"Investors are more focused on blue chips such as John Keells," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd, adding profit-taking had dried up.

Turnover got a boost as a foreign investor sold shares of National Development Bank Plc to other foreign investors, Mathew said.

Turnover stood at 1.78 billion rupees, well above this year's daily average of around 739.1 million rupees.

Shares of John Keells Holdings rose 0.96 percent, while Ceylon Tobacco Company gained 1.09 percent.

Commercial Bank of Ceylon Plc, the country's biggest listed lender, rose 1.46 percent, while National Development Bank ended 0.12 percent weaker. 

($1 = 145.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Sri Lanka Insurance revenue up by Rs 2 bn

Sri Lanka Insurance (SLIC) reported a promising year during 2015 with growth in performance in almost all areas of business.

The growth for the year was robust at 18.65%, a significant improvement over 2014. The total revenue of the organisation grew to Rs. 31 billion in 2015 from Rs 29 billion in the previous year.

Meanwhile, Gross Written Premium (GWP) increased to Rs. 24.5 billion from Rs. 20.6 billion while Net Earned Premium increased to Rs 20 billion from Rs 17.8 billion the previous year. The GWP for life insurance grew by 29 percent to Rs 10.5 billion from Rs 8 billion in 2014, resulting in notable gains in market share, while the General Insurance GWP increased by 12 percent to Rs. 14 billion from Rs 12.5 billion. As a percentage of the total market share, SLIC’s GWP for Life and Non-life stood at 23 and 21 percent respectively.

SLIC saw its Profit Before Tax grow to Rs. 4.8 billion last year from Rs 4.3 billion over the previous year while Profit After Tax grew to Rs 3.4 billion from Rs 3.2 billion in 2014. The company reported one of the largest asset bases in the industry, at Rs 167 billion which had grown steadily over the Rs 162 billion asset base in 2014.

The General Insurance Fund increased to almost Rs 15 billion in 2015 over the Rs 13 billion in 2014 while the Life Insurance Fund grew to Rs 77 billion from Rs 74 billion over the same period, which is the highest ever in the industry. Its shareholders’ fund was also the highest at Rs 63.7 billion. The largest ever bonus, at Rs 5.4 billion, was also paid to Life policyholders during 2015.

Backed by these strong financial credentials, Sri Lanka Insurance also partners with some of the top re-insurance organisations in the world.

The many measures the organisation had implemented to develop its systems infrastructure such as the integrated finance system known as SAP, had borne fruit with these new systems offering solutions for most financial reporting and backend control issues.

An area which will come under the increasing focus of SLIC is the improvement of insurance penetration in the island. It has been found that only 12 percent of the local population and 29 per cent of the employed population have obtained Life policies.

SLIC has led the motor insurance market for the sixth consecutive year in 2015 and in 2016, it hopes to carry this momentum forward while positioning itself as the ‘National Motor Insurance Brand’.
www.dailynews.lk

Market conditions hamper Dunamis, First Capital margins

Dunamis Capital PLC Group revenues increased marginally during the 2015/2016 year to Rs.2.9 bn. Revenue erosion in the Financial Services segment was more than off-set by combined revenues of the Real Estate Development and Manufacturing segments.

The Group cost of sales rose to Rs. 2.2 bn in 2015/16 relative to Rs. 1.3 bn in the previous year, attributable mainly to the development activities of the Kelsey Group, Chairperson Manjula Mathews said.

“We reported a consolidated after-tax loss of Rs. 414 mn during 2015/16 in comparison to a profit after tax of Rs. 570 mn in the preceding year.

The bottom line was negatively impacted by the decrease in First Capital Group’s profitability due to adverse market conditions,” Mathews said.

A total of Rs. 123 mn was paid in dividends to shareholders, with Rs. 51 mn paid to shareholders with non-controlling interest.

The First Capital Group recorded a net trading income of Rs. 504 mn reflecting a 67% decrease YoY. Results were severely impacted due to the Fixed Income business comprising mainly primary dealing underperforming in prevailing market conditions.

First Capital Group’s consolidated net profit amounted to Rs. 47 mn reflecting a 95% decrease YoY from Rs. 985 mn in 2014/15 which included a one-off gain of Rs. 233 mn resulting from the deemed disposal of an equity investment.

The sale of 45 residential units of the Templer’s Square development in Mount Lavinia drove the Kelsey Group’s revenues up to Rs. 1 bn in 2015/16 up markedly from Rs.103 mn in 2014/15.

Realised contribution from Templer’s Square for the year amounted to Rs. 128 mn.

In 2015/16 Primo revenues grew to Rs. 395 Mn from Rs. 141 Mn in the previous year.

Revenue growth however has not been sufficient at this early stage to cover fixed costs, resulting in a net loss of Rs. 132 Mn for the year under consideration.
www.dailynews.lk

Abans Finance 1Q profits grow by 31%

Abans Finance, a member of the Abans Group, has registered a pre-tax profit of Rs. 51.5 million for the quarter ended June 30, compared to Rs. 36.3 million recorded in the corresponding period of 2015, achieving a year-on-year growth of 41.86 %.

The post–tax profit of the company for the quarter under review has also improved by 31.1%, from Rs. 26.12 million in Q1 2015 to Rs. 34.24 million in Q1 2016. The company has continued to increase its profitability amidst external challenges such as increasing interest rates and slow down in consumption.

Nevertheless, NII of the company recorded a remarkable increase of Rs. 58.8 million or 37.7 % during the period under review from Rs. 155.9 million in Q1 2015 to Rs. 214.7 million in Q1 2016, aided by the significant expansion of the asset-base of the company since Q1 2015, coupled with prudent liability management strategies.

Non fund based income (NFBI) which mostly comprises of fees, commissions and other fee based income decreased to Rs.12.9 million as opposed to Rs.15.0 million earned for the first three months of the year 2015, reflecting a decline of 13.8%.

A 380.1% growth was recorded in other operating income for the period under review as compared to the corresponding period in 2015. Other operating income earned during the first quarter of 2016 amounted to Rs. 4.5 million whereas Q1 2015 was only Rs.0.95 million.Operating expenses of the company which stood at Rs. 82.4 million for the first quarter in 2015, increased to Rs.109.5 million during the same period in 2016, reflecting a YoY increase of 32.8%. This increase was mainly due to the increase in personnel costs. However, the Cost to income ratio without VAT and NBT on financial services in Q1 2016 has improved to 47.1% from 47.8% recorded in the first quarter of the previous year.

Impairment charge on Loan and Receivables for the first quarter of the year 2016 amounted to Rs.60.2 million which is an increase of Rs.10.4 million as compared to Rs.49.7 million impairment charges recorded for the first quarter of the previous year. Despite these challenges, the company’s total asset base grew by 2.53% during the quarter (annualized 10.13%) and stood at Rs.6, 304.37 million as at 30 June 2016.

www.dailynews.lk