team in Dubai for Galadari Bros 56% stake
high powered team from the Nawaloka Group of companies comprising
its managing director Jayantha Dharamadasa and finance director
Sunil Piyawardena are currently in Dubai to negotiate for the 56%
stake in Galadari Hotel, Colombo held by the Galadari Brothers of
the UAE, market sources said.
has issued shares of 185 million.
the Nawaloka Group bought the 24% stake in the Hotel held by the
Treasury for Rs 843 million. This transaction comprised the changing
of hands of a total of 44.4 million shares at a price of Rs 19 a
sources further said that according to unconfirmed reports, the
Nawaloka Group was looking at a price of around Rs 22 a share in
their negotiations with Galadari. However, sources close to the the
Nawaloka Group were tight-lipped about the expected sales price for
the finalisation of this transaction.
Hotel carries a debt burden of Rs 4.5 billion- that it owes to the
Galadari Brothers, the investors, personally.
sources close to Nawaloka were confident that the company would be
able to wrangle through these seeming roadblocks and make a
successful buy, despite these liabilities that the Hotel carries.
said that it was a perception of the market that when Nawaloka
bought the Treasury's stake in the Hotel, that the next step of this
local company would be to negotiate a successful deal with the
Galadari Brothers, if such a deal had not already been made, in
order to gain a controlling stake in this five star city hotel.
Hotel, which is listed in the Colombo Stock Exchange's Default
Board, saw its shares close at Rs 17.25 at the end of Friday's
trading, 25 cents more than its previous closing price. Meanwhile,
the team from Nawaloka is expected to return to Colombo tomorrow.
revival in doubt
now defunct Cooperative Wholesale Establishment
(CWE) Retail Ltd. (CWERL) will require a capital injection of
Rs one billion if it is to be resuscitated, Commerce Ministry
Secretary S.Wirithimulle said.
CWERL functions under the Commerce Ministry. "The CWERL carries
a Rs 700 million debt that it owes its suppliers and another Rs 300
million debt to the Bank of Ceylon," CWE sources said. In
addition its monthly salary bill for its 2.500 employees is Rs 35
million, they added.
CWE, the precursor to the CWERL and commonly known as Sathosa, was
established as a state run entity in 1949 to provide the consumer
with essential food items at a reasonable price. But this objective
was seemingly shattered when a consortium of private sector
companies which was given its management in 2003, withdrew from the
CWERL due to cash constraints, labour problems and the government
not allowing it to raise money from the market through a rights
issue in order to fend off its liquidity crisis.
sources further said that even if the CWE was operational, it needed
to make a monthly turnover of Rs 500 million in order to meet its
monthly salary bill. But this target was not achieved, they said.
"Even under private management its turnover did not exceed Rs
300 million," they added.
June, the CWE's 3,500 employees have been in the payroll of the
Treasury. They are being paid a monthly dole of Rs 4,000, the
sources said. " But when the CWE was functional, a minor
employee's take home pay was between Rs 8-10,000, double the value
of the current dole," they said.
sources further said that with its shelves bare and with unpaid
debts due to its suppliers, the chances of CWERL being revived
especially by the government was slim.
with its 150 outlets has remained closed since June after a
consortium of private sector companies comprising Richard Pieris,
Ceylon Biscuits and Carson Cumberbatch which were given a 40% stake
in the company for Rs 680 million plus management control in 2003,
withdrew from CWERL in May due to labour problems engineered by JVP
led unions and the Treasury not giving it permission to raise money
from the market through a rights issue to run its operations. The
JVP at that time was with the government.
consortium had also requested the government to return the Rs 680
million paid by them and to once again take full control of the CWE
as a response to charges made by Fernandopulle that they had been
running the CWERL inefficiently. But the government has not
responded to their request.
said that business magnate Don Harold Stassen Jayawardena has not
been approached to take over the CWERL, in response to a question.
Earlier, President Chandrika Bandaranaike Kumaratunga had requested
Jayawardena to look into the possibility of reviving the CWERL.
said that a Cabinet memorandum has been submitted by Minister
Jeyaraj Fernandopulle for the government to take over the running of
is more interested in acquiring the 66% stake in Colombo Hilton
currently held by the Treasury," the sources said. Jayawardena
was not immediately available for comment as he was in Singapore.
Fernandopulle was also not available for comment as he too was
depreciation table hits equipment leasing
government should recognize leasing as a development mechanism
particularly suitable for the small and medium sized enterprises (SMEs),"
said E.H. Wijenaike, Managing Director Central Finance (CF) Company
Ltd., in his review of the Company's performance in the financial
year (FY) ended March 31, 2005.
this end, the government should adopt policies necessary to support
the leasing industry so that it can continue to play a wider role in
private capital formation especially in rural communities to
facilitate and strengthen industrial development outside the Western
Province where there is now an over concentration of development, he
said that the leasing industry has been the main source of finance
to many rural and urban small-scale businesses such as workshops,
agro-industries, bought-leaf factories, retailing and service
said that the new development strategy of the government advocates
much support for the agricultural and the SME sector to the extent
of establishing a specialized SME bank, with the priority sectors
for SME lending having been identified as advanced technology,
software and business process outsourcing, technological
improvements, fisheries, gems and jewellery, agro-industries,
services and SME exports. Duty free imports are contemplated for
a further incentive to the entrepreneur by way of accelerated
depreciation on plant and machinery would no doubt stimulate
investment well beyond expectations, said Wijenaike.
warned that the leasing business has come to a standstill because of
the new depreciation table for equipment leases which have been
extended from two to eight years in order for the lessor and the
lessee to gain a 100% tax benefit on depreciation. Wijenaike said
that inconsistent policy towards the leasing industry has had a
significant impact on CF's ability to provide credit at reasonable
cost to segments where it is most needed.
continuing said that the reduction in the annual depreciation
allowances from 50% to 12.5% for plant and equipment as a result of
the 2004 Budget proposals dealt the final blow to equipment leasing.
further said that as lease rentals are taxed in capital repayments,
the new depreciation regime requires lease structures be extended
from the earlier two year period to eight years to make it
profitable (ie tax neutral) for the lessor.
the one hand lessors have neither the long-term funds nor the
appetite to absorb credit and interest rates associated with an
eight year lease, while on the other, lessees are reluctant to
contract for such long periods.
also said that the absence of a clear legal process with regard to
repossession and the short commercial life of equipment (unlike
vehicles which retain ready resale value) were major impediments
that lessors grappled with when extending equipment leases.
said that the government needs to ensure uniformity in tax treatment
across different markets so that there is no distortion in the cost
of providing finance.
said that nowhere is this discrimination more evident than in the
tax treatment of financing used vehicles under the VAT system.
said that a used vehicle bought under a hire-purchase (HP) agreement
is exempt from VAT (on the purchase and hire instalment) although
the same asset acquired through leasing would attract VAT at 15%
without a corresponding input claim.
makes leasing more expensive since the leasing company will have to
capitalize the input tax paid on the purchase of the vehicle and
collect it over the period of the lease.
said that from a commercial standpoint there is no difference
between these two transactions as they both involve the sale by a
supplier to the lessor/hire vendor and thereafter a lease/HP to the
therefore fail to see the need to treat a HP transaction differently
from a lease for VAT purposes," he said. This distortion has
severely restricted leasing business in the used vehicle market to
the extent that almost all used vehicles are now financed under HP
agreements, said Wijenaike.
the CF Group in the period under review saw gross turnover increase
by 7.5% to Rs 10.4 billion year on year (YoY), interest income by
5.1% to R s 2.2 billion and operating profits by 24.3% to Rs 986
million. However, net profit for the year declined by 8.8% YoY to Rs
decline was primarily due to the increase in the tax component by
500% YoY to Rs 257 million.
Indika Dayananda from Unawatuna, a small time garment and soft toys
manufacturer, exports to Japan, the UK (through a Sri Lankan who
sells his products at week-end fairs) and to an American yogi
instructor, belts and bags manufactured by him.
who started his business two years ago and named it Pilseli, meaning
that it is a place that sells appropriate clothes, uses material
such as handloom cloth, hand woven cotton fabrics and buttons made
out of coconut shells and sea shells.
company provides direct employment to ten rural families and
indirect employment to another 20. His product range includes
blouses, skirts and pants. Having worked in several garment
factories as sample room manager, he had wanted to start his own
business after seeing handloom collections at Barefoot and other
reputed outlets, an EDB communiqu‚ said.
appreciates by 3.6%
rupee has appreciated against the dollar by 3.6% so far during the
year, the Central Bank (CB) in its Monetary Policy Review for August
said that due to higher private remittances, official inflows to the
government and the benefit of debt relief, official international
reserves have increased to around dollars 2,378 million as at end
June 2005 from dollars 2,196 million by end December 2004.
in a press release said that having reviewed the recent economic
developments and projections, the Monetary Board has decided to
conduct open market operations aggressively to mop up excess
liquidity from the market while maintaining CB's policy interest
rates at their current levels.
said that the growth momentum in all major sectors in the economy is
continuing as expected at the beginning of the year. The Agriculture
sector is expected to recover with the continuation of favourable
weather conditions. Following the all-time high level in paddy
production recorded in 2004/05 Maha season, paddy harvest in Yala
2005 is also expected to reach a high level.
and rubber production have recorded a strong growth in the first
half of the year while coconut production has indicated a gradual
recovery. The output of the Industrial sector has grown by 5.9 %
during the first half of 2005 and this growth has been broad-based
and balanced across export and domestic market-oriented industries.
in the Services sector is continuing with major sub sectors such as
telecommunications, tourism, port services and transport showing
Tourist arrivals increased by 12.3%, from 50,525 tourists in
July 2004 to 56,745 tourists in July 2005.
expansion of external trade continued during the first half of the
earnings increased by 11.5 % during the first half of the year,
reflecting a continuous improvement in all three major export
on imports increased by 10.3 % during this period. Private
remittances have increased by 21 % during the first half of the
year. Reflecting these developments, Inflation that continued to
moderate during February-June 2005 due to the improvements in supply
conditions as well as the monetary policy actions taken so far, has
increased again in July 2005.
point-to-point change in the Colombo Consumers' Price Index (CCPI)
increased from 9.4% in June 2005 to 10.8% in July 2005, while the
Sri Lanka Consumers' Price Index (SLCPI), which is available with a
lag of one month, recorded a decline from 13.2% in May 2005 to 11.7
% in June 2005, on a point-to-point basis. Recent tax revisions by
the Government would help contain further inflationary tendencies,
even though soaring international petroleum prices continue to
threaten price stability.
level of reserve money which is the principal operating target of
monetary policy remains close to the expected path. The growth in
broad money continues at around 20 % mainly due to the increase in
credit to both the public sector and the private sector. The growth
in money supply is expected to moderate with the monetary policy
measures taken so far being gradually transmitted to the financial
the policy rate increases in May and June 2005, short-term money
market rates have adjusted upwards and commercial banks have
responded positively raising both lending rates and deposit rates.
these developments, the Monetary Board has decided to conduct open
market operations aggressively to mop up excess liquidity from the
market while maintaining CB's policy interest rates at their current
levels. CB will continue to monitor developments in monetary
aggregates and other macroeconomic variables and adjust its monetary
policy stance appropriately.
release of the next regular statement on monetary policy is
scheduled for September14.
Secure trading system
Dialog Telekom (DT) made its debut on the Colombo Stock Exchange (CSE)
on July 28, the company also launched one of the most convenient and
secure mobile stock trading systems implemented so far in the whole
of South East Asia, a press release said.
announced the launch of a mobile trading facility based on its GPRS
portal in collaboration with CDAX - Sri Lanka's number one online
trading service provider, the communiqu‚ said.
Dialog Mobile Trading facility enables investors to trade in shares
from their mobile phone utilizing GPRS and/or SMS bearer technology.
The release quoting DT CEO Dr. Hans Wijayasuriya said that
their objective in introducing this product was to deliver an
unprecedented level of Immediacy and proximity of the CSE to the
individual investor. Investors are now empowered to make instant
investment decisions while being on the move in Sri Lanka or
overseas, he had said.
order to trade shares on a mobile phone, Dialog customers need to
download the J2ME based system to their java-enabled handset from
the dialogw@p site and thereafter connect via GPRS.
release quoting Dinesh Saparamadu, CEO, hSenid Software
International - the developers of the software said that their
solution will enable high players in the stock market to be more
interactive and trade shares while on the move.
Seneviratne, CEO, Investor Access Asia - the developer of CDAX, Sri
Lanka's pioneer on-line trading system said that CDAX Mobile is
another step towards increasing investor accessibility to the CSE.
is a significant milestone in financial trading in Sri Lanka, with
three industry leaders Dialog, hSenid and CDAX joining hands.
Investors can now manage their portfolio while on the move via a
highly user-friendly facility with a real time trade ticker real
time stock quotes and live order placement and confirmation
facilities, the communiqu‚ added.
code for cinnamon
acceptance of a separate HS Code for Sri Lankan
cinnamon which will be effective from January 2007, is one of
the most important achievements that the Spices and Allied Products
Producers' and Traders' Association (SAPPTA) has made in recent
times, its Chairman Abdul Cader speaking at the SAPPTA AGM that was
held recently said.
release quoting Cader said that Cinnamon is the largest spice
exported from Sri Lanka. He had further said that a separate HS code
for cinnamon means that this would give the country an opportunity
to regain what it has lost in the past.
had however pointed out that Sri Lankan pepper exports have tumbled
by over 3,000 tonnes compared to the previous year mainly due to the
increase of pepper exports from Vietnam increasing by 24,000 tonnes
compared to 2003.
was also revealed that a matter of great concern to exporter members
is the large amounts of VAT refunds that are overdue, causing
additional costs to exporters as well as cash flow problems. The
Association's interests span the entire spectrum of spices,
including cinnamon, pepper, cloves, cardamoms, nutmeg, mace and
vanilla, and other agricultural crops and derivatives such as
cashew, arecanuts, cocoa, coffee, essential oils, oleoresins, herbal
products and organic products.
three day workshop beginning on Tuesday that aims at enhancing
awareness among government officials, the business sector and civil
society about the implications of WTO agreements on the economy of
Sri Lanka and to assist the country in building the necessary
capacity to address issues arising from its participation in the WTO
will be held at the Distance Learning Centre, Colombo, a communiqu‚
will be conducted by the International Trade Centre (ITC) UNCTAD/WTO
in conjunction with the Commerce Department. A key component of this
programme involves building capacity through training on strategic
market analysis, with special attention given to market access
speakers will be ITC experts using online systems that are now
available in Sri Lanka, namely Market Access Map and Trade Map.
Topics to be covered include 'analysis of international trade flows
to identify trade potential,' 'analysis of tariff barriers to
identify implications for exporters' and 'applying ITC's market
analysis tools for the development of trade strategies.'
workshop is organised by the EU-Sri Lanka Trade Development Project
that is funded by the European Commission.
latest developments in International Financial Reporting Standards
and the development of Accounting Standards for small and medium
enterprises (SME) will be the focus of an international workshop
that will be held at the Hotel Taj Samudra on Friday.
is organised by the Institute of Chartered Accountants of Sri Lanka
(ICASL) and the Institute of Chartered Accountants of India, under
the aegis of the South Asia Federation of Accountants (SAFA) Centre
for Excellence for Standards and Quality.
workshop is meant for ICASL members, professionals, business
leaders, capital market players, corporate governance activists and
will consist of three presentations on 'Accounting Standard for SMEs.'
The presentations on Accounting Standards for SMEs and the
update on the latest changes in the IFRS will be delivered by IASB
Director and Patron of ICASL's Technical Division Dr Paul Pacter who
is also the architect of the project to develop an accounting
standard for SMEs.
release quoting ICASL President Indrajith Fernando said that in
today's global context, a transaction will be accounted for in one
uniform way irrespective of where it takes place. Uniformity can be
achieved only if the accounting standards are short, principle-based
and bear clarity. With this objective in mind, the IASB has effected
improvements to 13 International Accounting Standards (IASs). Since
the National Accounting Standards of SAFA countries are based on
IASs and IFRSs, it is important to obtain a clear understanding of
the improvements effected to the 13 standards.
Mihular, Regional Executive Officer for KPMG Middle East and South
Asia (MESA)and KPMG's IFRS Head for the region will present the
module on 'Improvements to IASB standards.'
who will make the presentation on the Accounting Standard for SMEs
is the Director of Standards for SMEs at the International
Accounting Standards Board, London and Director In the Global IFRS
Office of Deloitte Touche Tohmatsu, Hong Kong.
Ceylon Chamber of Commerce will hold a seminar on "Sethus-
amudram Canal Project: Implications for Business" at its ground
floor auditorium on August 29, a press release said.
Members of the Sri Lankan Government delegation that visited
India recently for discussions on the project and experts who have
studied the project have been invited to address the seminar.
seminar is intended to enlighten the business community on the
progress made by the Governments of India and Sri Lanka on the
proposed project and on the possible implications of the project on
business to facilitate business sector to adopt appropriate
strategies to face the implications more effectively, it said.
'Sethusamudram naval canal project' initiated by India has created
much discussion and debate among government officials, environmental
groups, business community and the general public both in India and
in Sri Lanka. Diverse views are expressed on the implications of the
following areas would be covered during the seminar: Sethusamudram
Canal: Why is it Built? Implications on Shipping and Ports, Measures
to cope with Navigation and Emergency, Impact of the Sethusamudram
Canal Project on Fisheries, Potential Impact of the Project on
Environment and Steps taken by the government to address the
concerns of Sri Lanka.
panel of speakers will consist of Rohan Abeywickrama (Director,
Sathsindu Group of Companies), Dr. Krishan Deheragoda (Vice
Chairman, Sri Lanka Ports Authority), M A R Kularatne (Chairman,
Marine Pollution Prevention Authority) and A L Ratnapala (Assistant
Secretary General, Foreign Affairs Ministry). Dr. Parakrama
Disanayake (Chairman/CEO, Aitken Spence Shipping Ltd) will chair the
seminar. The participants may clarify their issues from the expert
panel of speakers and panellists during the open forum.
Butler and Co., Ltd held a press conference on Thursday to promote
its "Fostering Leaders of Tomorrow" programme which offers
25 students affected by the tsunami educational sponsorship.
programme is being held to commemorate Darley Butler's 25 years as
agents for Bic razors in Sri Lanka. It is open to those who will
have passed the Year Five Scholarship exam this year and who are
directly affected by the Tsunami.
students will be selected with the aid of the Education Ministry,
with five scholars picked from the North, five from the East and 15
from the South West.
will each receive Rs 1,000 per month from Year Six upto the Advanced
Brand Manager Peter Anthony Pulle said that the programme was a way
for Darley Butler and Bic to unite in "offering a gift back to
society." He claimed that the whole process would be monitored
to ensure that the deserving children received the money and that it
be used for their future education.
Industry development takes backseat
wants to increase number of directors in plan
Sarada M. de Silva, Chairman, The Spice Council
(TSC) and Ceylon Cinnamon Association (CCA) made a scathing
attack on the Department of Export Agriculture (DEA) at the launch
of Good Manufacturing Practice (GMP) Cinnamon Processing Centre at
Dassanayake Walawwa Cinnamon Plantations in Kosgoda, Balapitiya
said that a salient point in a proposed five year plan formulated by
the DEA for the industry, is to increase DEA's cadre of directors,
deputy directors and assistant directors all most ten fold.
fund this expansion indirectly, the DEA
has proposed a cess on cinnamon. Ultimately the poor
smallholder has to pay for the benefit of a few officials, said de
us in the cinnamon industry enough is enough," he said. "I
welcome the DEA or anyone interested in the spice industry to work
along with TSC. Otherwise, with or without the DEA, TSC will take
this industry forward," he said.
Silva further said that the DEA is the government department
specially designated to look after the spice sector. But the
industry has received step motherly treatment from DEA for far too
long. Cinnamon accounts for more than 55% of the value and volume of
all spice exports consistently for the last 20 years, he said.
years the cinnamon industry has been lobbying DEA to invest at least
50 % of its resources in the cinnamon industry and appoint a senior
deputy director based in Galle to be in charge of the development of
cinnamon," said de Silva.
of implementing these proposals, the DEA has proposed the
afore-mentioned five year plan which the spice industry has not seen
nor were consulted," said de Silva.
further said that out of the 25,000 hectares (ha.) planted under
cinnamon, more than 75% is in the southern Province. "We have a
series of problems affecting the cinnamon industry," said de
Silva. The most important is the acute shortage of cinnamon peelers.
has got worse after the Tsunami as peelers have migrated to other
jobs in the construction industry. TSC has proposed that a crash
programme to train peelers begin immediately and five members of the
CCA, Kahawatte Plantations have offered their facilities to conduct
is now up to the DEA to start the training," he said. De Silva
further said that they have been lobbying the Government for a
number of years to establish two cinnamon peeler training centres in
Galle and Matara.
said that Galle has over 10,000 ha. and Matara over 8,000 ha. TSC
has now taken the initiative on its own and has formulated plans to
set up the first training centre in the Galle district. "All we
need is about 20 acres of cinnamon land and funding to set it up.
TSC will seek donor funding to finish this project," said de
said that GTZ, Germany and The Competitiveness Programme of USAID
are helping TSC in drawing
their future plans and to source funding to implement them.
also said that this training centre can create jobs for the
unemployed in the Galle district.
Silva appealed to the Governor, Chief Minister and Deputy Minster to
release 20 acres from Galagoda Estate, Madampe, Ambalangoda which
has been acquired for a housing project for Tsunami victims.
is one of finest cinnamon plantations and ideally suited to
establish the training centre, he said. De Silva had also said that
Sri Lanka has been producing cinnamon in unhygienic conditions on
the floor for centuries.He had further said that this GMP Model
centre is a project of the TSC to upgrade cinnamon processing to
meet 'ever'demanding international food safety standards.
is the first of its kind in Sri Lanka and a project approved and
supported by the National Council for Economic Development (NCED)
Export Cluster. Total cost of the project is over Rs. three million
excluding the value of land. As a proposal of the NCED in the 2005
National Budget it is partially being funded by the Export
Development Board to the value of Rs. one million.
had also said that though a project of TSC, it has been taken
forward and implemented by Wijith Jayatilleke a pioneering
entrepreneur in the cinnamon industry.
had painstakingly developed this centre, spending over Rs. three
million and to a level well exceeding GMP standards required.
Jayatilleke is also in a position to obtain the HACCP within six
months of operations. There was an extensive effort that went into
obtaining this internationally recognised GMP certification, said de
further said that TSC will have its annual sessions on October 12.
This is part of the World Spice Festival (WSF) organized by the
Tourist Board, Tourism Industry and TSC from October 7-16. The
concept of the WSF is to bring to Sri Lanka leading chefs from
around the world and have a gourmet food festival showcasing Sri
the Business Sessions in the Annual Sessions of the TSC, it has
invited the Anandan Abdullah, Executive Director of the
International Pepper Community to deliver the keynote address and
for the Technical Session, Prof. Shaim C. Varshney from India a
leading expert on steam distillation of Spice & Herbs essential
oils. "The members in the spice industry will
benefit from the Annual session and I welcome all to
participate," said de Silva.
records highest MDRT qualifiers
Lanka's leading life insurer Ceylinco Life has produced 26
qualifiers to the Million Dollar Round Table (MDRT) in 2004,
the highest number from a single company for the year, a press
company also announced that 28 of its sales officers have received
The International Quality Award (IQA), an important benchmark
in the Insurance
industry, in a 'clear' demonstration of the high levels of
Professionalism encouraged by Ceylinco Life.
first insurer in Sri Lanka to field representatives at the MDRT,
Ceylinco Life had by the end of last year produced over 75 MDRT
qualifiers, the largest pool of personnel from Sri Lanka to be
represented on the elite global forum for top notch insurance
professionals who meets annually in the USA.
has been one of the keys to our phenomenal success," Ceylinco
Life Chief Executive Director R. Renganathan is quoted to have had
said. "We are pleased to see that we continue to set the
standards for professionalism in the local insurance sector."
Life was also the first insurer in Sri Lanka and South Asia to
produce Chartered Insurance Agency Managers (CIAM), achieving yet
another milestone in the insurance industry.
three representatives of the company's management have to date
received the prestigious CIAM designation, the highest
internationallyrecognized qualification for agency managers in life
isawarded by the Life Insurance Marketing and Research Association (LIMRA).
Life recently invested Rs 25 million to enhance customer
Service and efficiency by providing the latest in lap top
computers to the company's sales force, in an initiative that will
also contribute to professional development.
Life emerged as the industry-wide leader in 2004 following a
record-breaking performance in premium income.
company sold a record
112,704 new policies in the year bringing its total premium income
to Rs 3.962 billion and giving the company a corresponding market
share of 31.5% in the life insurance segment.
taxes, leasing, HP market grows
the envisaged new Finance Companies Act, it will be mandatory for
every finance company to obtain a rating, LB Finance Ltd., in its
Annual Report for the period ended March 31, 2005 said.
company has signed an agreement with Fitch Ratings Lanka Ltd to
carry out a rating process after the balance sheet date.
also said that the government's 2004 budget introduced new tax
regimes which have direct and indirect effects on the company's
operations. One of the significant issues emphasised is that only a
third of tax losses are allowed to be set off against the net profit
for the period, LB said.
this new tax regime imposed by the government in relation to the
importation of vehicles, the market has continued to grow in both
leasing and hire purchase, the report said.
of the competitiveness in the industry, the financial sector has
also continued to grow more than any other sector of the economy, it
LB Finance, for the 15 months ended March 31, 2005 saw gross income
grow by 43.8% to Rs 779.2 million, compared with a figure of Rs
541.9 million recorded for the 12 months ended December 31, 2003.
income during this period grew by 59% to Rs 677.4 million. This
result was primarily driven by continued significant growth in
advances as well as improved results in the recovery procedure of
the credits, the report said. The management believes that hire
purchase will play a vital role in the future operations of the
company, said LB.
profit during this period grew by nearly 1,500% to Rs 48.4 million.
Company's Managing Director Sumith Adhihetty in his review of the
company's performance said that in the 15 month period under review
deposit mobilization increased by 30% to Rs 2.6 billion.
company was also able to reduce the interest cost in their deposit
base, enabling them to be more competitive in their lending
advances portfolio primarily
consist of leasing, hire purchase, pawn broking and mortgage
loans. "With this product range we have diversified our
advances portfolio from medium and small scale financing to micro
financing and have built up a sustainable risk and reward base
portfolio which has stability and return," said Adhihetty.
company has recorded a redemption ratio of 87%. The higher the
redemption ratio is, the better for the operation as this will
enable LB to reinvest the money collected more frequently with new
pawning customers and to earn more interest in recycling the money,
the company said.
Adihetty said that total disbursements for the period under
discussion was Rs 3.1 billion, a growth of Rs 1.4 billion compared
to the previous year.
main contributors to the growth were HP advances and pawning
advances which have grown from Rs 21.29 million to Rs 737.95 million
and Rs 743.89 to Rs 1,186.3 million respectively, he said.
the reporting period, gross investment in leasing had increased by
Rs 174 million, ending at Rs 1,646.5 million.
newest player in market
Reach Holdings Ltd (CRHL) is the newest financial services provider
to enter the local market with its three subsidiaries-a leasing
company, a factoring/small and micro lending company and a network
of eight branches, a press release said.
Nivard Cabraal, a chartered accountant with extensive experience in
the areas of business restructuring and corporate governance heads
the new company as chairman. CRHL's director board has several
qualified and distinguished names in the banking and financial
sectors such as Mayura Fernando- chartered accountant (Managing
Director), Daya Muthukumarana- banker and Sumant Batra-an Indian
lawyer, where both are directors.
is due to introduce a range of products and services to the Sri
Lankan financial market, the communiqu‚ said. They include
portfolio management, taking companies public, arranging of private
placements of debt and equity, management of companies, arranging
and implementing management information systems and managing debt
and equity issues.
release quoting Cabraal said that the new holding company has also
infused new equity capital into two ongoing businesses and thereby
acquired controlling interests of Vanik Leasing Ltd (VLL) and Vanik
Factors Ltd (VFL), together with its branch network of offices in
leading outstation cities. These companies have been re-named
Capital Reach Leasing Ltd (CRLL) and Capital Reach Credit Ltd (CRCL),
while the branch network has been entrusted to Capital Reach
Business Development (Pvt) Ltd (CRBDL).
said that the main advantage of these acquisitions was that
CRHL has been able to harness the existing business potential
of these ongoing businesses since these subsidiaries are already
functioning profitably. The newly acquired companies are therefore
expected to be profitable from day one.
has now developed a specialized product range that caters to the
personalized needs of clients. Among such products are finance
leases, hire purchase, operating leases and other loans. The company
hopes to place an IPO after a year of its new operations and thereby
further expand its equity base. The Managing Director (MD) of the
company is Nalin Wijekoon (chartered accountant), while Ranjith de
Silva-leasing specialist and Anusha Wijesinghe (lawyer) are the
also has a specialized product range and an islandwide branch
network that caters to the individual needs of diverse clients.
Among its products and services are domestic factoring facilities,
personal small/micro group loans and the issue of letters of
guarantee and performance bonds. CRLL's main strength lies in its
personalized service, minimum documentation and the ability to
provide a pro-active service to its clients. The company's MD is
Kolitha Perera while S. Mudalige (lawyer), also serves on the Board.
has a network of eight branches-Kandy, Galle, Matara, Nuwara Eliya,
Ratnapura, Chilaw, Badulla and Kaduruwela. This network is expected
to play a critical role in the realization of the corporate goals of
the entire Group, as well as introduce new products islandwide.
Technologies concluded a successful business forum in Colombo
promoting awareness of its products and its formal presence in the
country recently, a press release said.
is a Singapore based distributor of IT components and related
peripherals. It distributes AMD, ASRock, Logitech, Netgear, Sony
Optical drives, Netgear and XFX in the SAARC region.
release quoting Kaira's Rajesh Attal said that this was an
opportunity for IT partners in Sri Lanka to get updated with the
world's latest technological trends and products. Rukshan
Jayawardena will be managing Kaira's operations and will be
conducting road shows, training programmes and marketing support
across the country. The Kaira Business Forum was a full day business
forum consisting of two sessions.
first consisted of a technology seminar where international trends,
new product innovations and emerging technologies were discussed. In
the second session the channel partners took part in an interactive
various aspects of business. The session witnessed partners
learning new and innovative customer centric products and solutions.
products like the 7800 GTX chipset based graphic card from XFX, Mimo
technology wireless product from Netgear and Sempron 2500+ in 64 bit
from AMD were also launched on this occasion.
Manager Kaira SAARC Operations Devendra Puri also spoke. ÿThe Forum
saw a participation of more than 175 channel partners from Colombo.
Imperial Institute of Higher Education (IIHE) was incorporated in
Sri Lanka in October 1996 and is amongst the oldest institutions
offering foreign degrees in Sri Lanka, a press release said.
mission is to provide comprehensive and accessible educational
opportunities of the highest quality with international links,
catering to the requirements of professionals, industry, commerce
and public affairs, through an excellent academic and motivated
by the University of Wales (UoW), the Institute offers a BSc (Hons)
in Business Management where the academic programme is designed so
that the "academic" is intertwined with the
"practical," enabling graduates to quickly make meaningful
contributions as managers and leaders in industry and commerce both
nationally and globally.
also offers an internationally recognised Masters in Business
Administration which is validated and awarded by UoW, bearing a
guarantee of the highest academic standing. This programme is also
highly practical where participants apply theoretical knowledge
acquired to real life situations using substantial case-study work.
order to maintain the highest quality standards, UoW validates all
its programmes by subjecting them to rigorous quality assurance to
ensure that they are on par with the teaching and learning standards
in the UK as required by the Quality Assurance Agency (QAA), UK. To
this end, a panel consisting of representatives from the UoW as well
as external examiners from outside Wales visits the Institute twice
received through the IIHE are the same as the one received by
students who are physically studying at the UoW, UK. As the degrees
are awarded by UoW, graduates in Sri Lanka can opt to go to Wales
for the annual graduation ceremony or attend the local graduation
ceremony in Sri Lanka.
become members of the UoW Guild of Graduates. Out of 300 students
studying for degrees at IIHE at present, 42 will graduate, which is
the largest number to graduate at one time.
provides air-conditioned lecture rooms and offers substantial
academic support to its students as well as facilities such as
high-tech multimedia computer facilities with unlimited internet
access to learning aids such as electronic journals and periodicals.
The Institute's academic staff are highly qualified and experienced
in their respective fields, with most having international post
graduate qualifications. The IIHE can be accessed on www.iihe.lk
for more in insurance
Assurance Lanka Ltd (PAL) became Sri Lanka's fifteenth and newest
insurance company to enter the country's largely untapped Life and
General insurance markets, a press release said.
Wimal Wickremasinghe (Managing Director/CEO) speaking at PAL's
launch is quoted to have had said that despite the existence of a
number of insurance companies in the country, the coverage of
insurance, both in life and general was low, with the former being
less than 15%. As such there was room for more insurance companies
to operate in Sri Lanka.
its 'novel' products are 'Vinivida'-an investment protection plan, 'Naya
Sahana'-a loan protection plan and 'Uththunga'-a family protection
plan. These products have attractive and competitive premium rates,
innovations and many rider benefits, the communiqu‚ said.
company has qualified and industry experienced insurance personnel
among whom are Fellow of the Chartered Insurance Institute (CII) and
Chartered Insurer (London) Gnanasiri Talagala as General Manager
(General), CII (London) Associate Chandrasiri Kevitiyagola as DGM
(Life) and Samitha Sooriyarachchi (Marketing Manager).
said that PAL's prime objectives are to service customers and issue
and dispose of insurance policies without delays together with the
prompt payment of claims.
the field of General insurance business, we have an array of
policies for both individuals and corporates," he had said.
Among those are Fire and Allied Perils (private dwellings), home
insurance, motor-vehicle insurance and personal accident and travel
insurance for individuals.
products on offer for corporates are Fire and Allied Perils
(business premises), motor-vehicle insurance, cargo insurance,
burglary, money and goods in transit, personal accident and surgical
and hospital expenses.
Life insurance business is reinsured by Munich Reinsurance Company.
In General insurance its reinsurers are Allianz Re, General
Insurance Corporation, India, Mitsui Sumitomo, Best Re, Toa Re and
company's other directors are T.M.D. William (Chairman), J.S.
Dissanayake (Deputy Chairman), Sriyal Dissanayake, D.L.W. Talagala,
Nihal Fonseka and Vinnie Gunarathne.
confidence continues to hold, despite extreme political instability
and concerns over the cost of living, says the August issue of
business magazine, LMD. This communiqu‚ was released prior to
Foreign Minister Lakshman Kadirgamar's killing.
said that the prediction of the previous edition of the
LMD-ACNielsen Business Confidence Index (BCI) - that business
confidence will take a severe beating in the wake of the events on
the political front in mid-June - didn't eventuate.
unique index, which tracks business sentiment each month, has - for
all intents and purposes - remained steady since March this year. It
has nudged up and down within a relatively narrow band of 107 and
rates continue to rise
term Government Securities and medium to long term Treasury Bonds
continues to show the increasing trend in the primary market in the
week ended Thursday , the Central Bank in a press release said.
preference still rests with meduim term Treasury Bonds. During the
week, total outright transactions reported by primary dealers
amounted to Rs. 10.7 billion, of which Rs. one billion were reported
for Treasury Bonds and Rs. 9.6 billion for Treasury Bills. The
repurchase and reverse repurchase transactions by primary dealers
continued to outweigh the outright transactions volume with Rs.
33.76 billion reported for the week.
current week's yield curve moves beyond the five year maturity.
Secondary market yield rates for four and five years maturities
reported by primary dealers marginally decreased compared with the
previous week, but overall yield curve for Government Securities
remained on each other for current week and previous week.
the secondary market, Treasury Bills were traded from 9.11 % to 9.42
% levels while the Treasury Bond yield rates varied within the range
of 9.58 % to 10.90 %.
yield rates for Treasury Bills at the Treasury Bill auction held on
for 91 day, 182 day and 364 day bills by five, six and two basis
points to 9.22 %, 9.28 % and 9.41 % respectively, compared with
those of previous week.
the auction, out of the total amount offered to the market, Rs. 9.73
billion Treasury Bills were accepted from the market. The balance Rs.
0.99 billion was purchased by the Central Bank.
There were no Treasury Bond auctions for the reported week.
this week (week beginning on August 21), Rs.9.62 billion out of
maturing Rs. 9.88 billion Treasury Bills will be re-issued to the
market on Wednesday
with settlement on Friday . The next Treasury Bond auction
for Rs. one billion of 4 year maturity will be held on Tuesday
for value addition
Sri Lanka Gem and Jewellery Association (SLGJA) requests the
government to organize trade delegations to visit gem producing
countries such as Madagascar, Myanmar and Tanzania, build closer
ties with them and encourage them to bring rough stones for value
addition and for sale in Sri Lanka.
the other issues were to remove VAT on the sale of jewellery for
foreign currency and on jewellery manufacture, to have a one stop
customs clearance point at the passenger terminal of the Colombo
Airport to facilitate the clearance of goods and to revert to the
earlier position where the miners auctioned their stones under the
supervision of the National Gem and Jewellery Authority(NGJA). They
were exempted of taxes except for 1% that had to be paid to the NGJA.
removal of VAT in the import of gems, diamonds and gold which are
the main raw materials used for the manufacture of jewellery and
allocation of government funds of Rs 40 million, together with the
SLGJA lab fund of Rs 100 million which is held in deposit by the
NGJA in order to set-up a gem laboratory of international standards.
said that as a result, Finance Minister Dr Sarath Amunugama
agreed to waive the VAT on gems, diamonds and gold and to
allocate funds to set-up a gem lab.
& Finance News
leads in low interest loans for SMEs
Bank is considering loans for small and micro industries at very
concessionary rates, said Sampath Bank's Manager - Development
Banking, Nimali Abeyratne in an interview.
is a Participatory Credit Institution (PCI) for a new loan scheme
called SMILE (Small and Micro Industries Leader and Entrepreneur)
III, where a sum of Rs. 9 billion is available for disbursement at
9% p.a. interest.
has already disbursed a number of project loans in this short period
that this loan scheme has been in operation. The maximum amount that
can be taken for a project under the SMILE III programme is Rs 10
million. The loans under SMILE III are payable over a maximum period
years including a grace period of two years.
development finance loans cover virtually every category - the
agriculture, industry and service sectors," Abeyratne said.
bank was actively involved in the
previous two credit lines under SMILE programme. Under the
SMILE 1 programme, the fixed
asset value (excluding land and buildings)
of a loan applicant could not exceed Rs 10 million. Under
SMILE 2 it was upped to Rs 14 million, and now under the current
SMILE 3 programme it has been increased to Rs. 20 million, she said.
gradual upping of an applicant's asset base for eligibility is proof
that such applicants have benefited from previous programmes, and,
as a result, was operating at a higher level both from a material
and financial point of view, said Abeyratne. Increasing of the
upper-limit in the asset base value is to make it possible for the
beneficiary to continue obtaining loans under the new programmes
that have come on stream so that he could further upgrade his
facilities, she said. There have been several success stories, where
the entrepreneur, whether it be a person involved in either the tea,
rubber, coir, transportation or furniture sub-sectors, has actually
progressed due to project loans obtained from Sampath Bank.
also said that under the SMILE 3 programme, loans for technical
assistance (TA) could also be procured for an interest charge as low
as 2% p.a.. The maximum amount available under the TA programme is
Rs 2.7 million.
for instance an industrialist wants to upgrade his factory with the
latest technology, he could apply for a TA loan," added
Deshapriya Pieris, a Sampath Bank officer handling re-finance
projects such as SMILE 3.
re-finance programme (that is how loans made available under such
international lines of credit are described) to which Sampath Bank
is a PCI is a scheme called the 'E Friends II' project where a sum
of Rs 5 billion has been made available.
interest charged under this scheme is 6.5%. The 'E Friends II loan
programme is for eco-friendly projects, said Abeyratne. Loans under
this programme are even available to finance the transplantation of
companies, with the upper-limit fixed under this programme being Rs
50 million. Sampath is processing loan applications amounting to
several hundred million rupees under this programme, said Abeyratne
and yet another targeted industry under 'E Friends II is the
polythene industry for recycling of polythene wastage.
Bank is also a PCI under several other current refinance schemes
such as Renewable
Energy for Rural Economic Development Project (RERED), Southern
Province Regional Economic Advancement Project (DASUNA) the ADB
funded Perennial Crops Development Project and the Plantation
Development Project, SUSAHANA Loan Scheme, New Comprehensive Rural
Credit Scheme (NCRCS) and Kapruka Ayojana for coconut cultivation.
also said that Sampath's development finance schemes reach the
furthermost corners of the country such as Moneragala and Ampara.
project lending covers both SMEs and large industries," said
Abeyratne. "Our lending is based on the feasibility of
a project - collateral is secondary," she said.
According to her what needs to addressed in project finance is
often than not, the established entrepreneurs know about the various
project finance (PF) lines that are on stream, but the problem is
with new industrialists, she said.
Bank has been involved in PF
(or development finance as the bank prefers to call it) for
the past 18 years and consistently organising seminars and awareness
programmes especially in rural areas to educate the outstation
entrepreneur about the availability of such schemes.
which has been involved in development banking since its inception
in 1987, as statistics show, has been very strong in this sector,
despite the fact that its core-banking activity is not project
finance but commercial banking.
76 strong branch network spread virtually islandwide, complemented
by not only a customer friendly, but a competent and professional
staff, has been the key to Sampath's success in development
finance," she said.
further said that in a recently concluded project finance scheme
refinanced by the ADB, Sampath Bank fared well, utilising Rs 1.1
billion out of the total loan portfolio of Rs 5.6 billion
distributed among several other participatory credit institutions (PCIs).
at an interest of 9.9% charged on the loans disbursed under this
scheme which was called Sahanya, was the lowest interest rate
charged by a PCI in this programme.
Bank reports strong growth in first half of 2005
Commercial Bank Group comprising Sri Lanka's benchmark private
sector bank, its subsidiaries and associate companies, has reported
strong growth in profits and other key performance indicators for
the first half of 2005, despite a substantial increase in the
effective tax rate and the continuing effects of the post-tsunami
appreciation of the rupee against the US dollar.
results released to the Colombo Stock Exchange (CSE) recently, the
group said its income grew by Rs 1.381 billion to Rs 7.046 billion,
a robust growth of 24.38 per cent over the first half of 2004. This
was achieved mainly due to a 32.63 per cent growth in interest
income to Rs 5.903 billion and a 25.88 per cent increase in other
income to Rs 997.2 million.
group reported a pre-tax profit of Rs 1.460 billion, an increase of
Rs 355.6 million or 32.2 per cent, over the corresponding half of
2004. The group's post-tax profit of Rs 873.9 million for the period
under review, reflected a growth of Rs 152.8 million or 21.19 per
cent. This was after providing for an income tax liability of Rs 586
million as against Rs 383.3 million last year.
group said the effective tax rate had risen from 35 per cent last
year to 40 per cent in 2005 mainly as a result of recent changes in
tax laws. Growth in pre-tax profit was achieved despite translation
losses amounting to Rs. 290.3 million which had to be absorbed in
the first half of 2005 as against a translation gain of Rs. 53.8
million for the first half of last year.
unusual loss was incurred consequent to the sharp appreciation of
the rupee against the US dollar resulting from the inflow of foreign
funds to the country in the aftermath of the tsunami in December
Bank's Senior Deputy General Manager (Finance and Planning), Ranjith
Samaranayake said the group was able to achieve strong profit growth
by continuing to maintain a healthy growth in all key business
total deposits of the group rose to Rs 107.6 billion for the period
under review as against Rs 98.6 billion as at December 31, 2004,
reflecting a growth of Rs 9 billion or 9.12 per cent. Net Advances
amounted to Rs 98.4 billion as against Rs 90.6 billion at end
December last year, a growth of 8.55 per cent. The total assets of
the group surpassed the Rs 150 billion mark and reached Rs 154.1
billion as at June 30, 2005, reflecting a growth of Rs 12.3 billion
over December 31, 2004.
growth in advances, deposits and assets was achieved despite the
shrinking effect of the assets and liabilities designated in foreign
currencies as a result of the appreciation of the Sri Lanka rupee
against these foreign currencies during the period,"
loan loss provisions recorded a decrease of Rs 47.4 million in the
first half of this year from Rs 246.7 million in the corresponding
period last year to Rs 199.3 million. This was even after providing
for the additional provisions required under the Central Bank's
notable aspect was that operating expenses of the group at Rs 2.249
billion represented an increase of only 11.84 per cent, well below
the growth of 15.45 per cent recorded in the net income of the group
in the period under review. The group’s non-performing advances
ratio continued to drop, recording five per cent (5%) as at June 30,
2005 as against 5.34 per cent at December 31, 2004. The provision
cover of the group as at June 30, 2005 was approximately 52 per
to key performance ratios, Samaranayake said the bank’s return on
assets, capital adequacy and cost income ratios are considered to be
the best among the peer banks.
feature of the group’s first half results is the fact that the
share of profits from associate companies rose from Rs 18.8 million
last year to Rs 48.7 million, a growth of 159 per cent.
Bank impressive in 1H
Asia Banking Corporation Limited (PABC Bank) posted an impressive
28.9% growth in the first six months of 2005 with its assets base
growing from Rs. 9,000 million to over Rs. 10 billion, evincing a
growth of Rs. 958 million during this period.
bank recorded an after tax net profit of Rs. 45.4 million against a
profit of Rs. 35.2 million for the corresponding period in 2004 and
pre-tax profits in the first six months of 2005 were Rs. 75.6
million, compared to Rs. 39.9 million during the same period in
deposits of the bank grew to Rs. 7,449 million from Rs. 6,557 last
year and advances increased from Rs. 6,052 million to Rs. 6,264
million. The net interest income improved by Rs. 48 million with a
growth rate of 29.2%.
has been good progress this year, which is very satisfactory. We
hope to make a profit of Rs. 100 million after loan loss provision
and tax by the end of 2005," said Managing Director / General
Manager / CEO, PABC Bank, R. Nadarajah.
reasons for this level of achievement are the effectiveness of
strategies that were put into place, the prudent course of action
taken to enhance the profitability of core businesses of the bank
and effective control over expenditure, Nadarajah asserted.
have taken steps to reduce the non-performing advances which are a
drain in the bank's profitability. Thecapital adequacy ratio is
maintained above the required levels and liquidity ratioshave also
been satisfactory," he added.
the first six months of 2005 the shareholders funds increased to Rs.
447 million due to re-evaluation reserves and the net profits of the
bank in the first half of the year. Important ratios such as the
cost income ratio also indicated a steady improvement over the
bank intends to introduce new products during the second half of the
year and also intends to further enhance the revenue from existing
products to maximise the contribution to the bottom line.
bank is in the process of introducing two information technology
based products - internet banking and the cirrus enabled debit card
- in the near future, in addition to a senior citizens account with
the 'turn-around' trend that commenced during the first quarter for
2004, the bank continued its performance throughout the year and was
in a position to achieve improved performance, mainly due to far
thinking and effective strategies and business formulas introduced
by the bank under the guidance of the board.
on core business lines - namely corporate banking, retail banking,
treasury operations and trade finance activities - started to
generate the required revenue and operational profits to the bank,
while strengthening the core business and key result areas.
recovery drive was also launched to recover and reduce
non-performing advances, which increased the revenue base further.
bank re-launched its logo and changed its name in October 2004 as a
long-term stratagem to face the future more aggressively and
underlined objectives of this strategic move were to create a strong
brand name in the market, reposition the bank in the consumer /
customer's mind, enhance the business domain and enhance corporate
pay off line 'Your Bank' is a self-imposed challenge, which sees and
treats each customer as an owner of the bank.
the advantages and capabilities of IT, the bank introduced SMS
banking during the latter part of 2004, basically bringing banking
to the thumbs of its customers. This SMS banking product was
introduced along with other unique products such as 'Gedarata Mudal'
(a home cash delivery product), mini credit card, re-launch of
Lahiru (minor savings account) as Lahiru Plus with additional
features and value additions and Foreign Exchange Services (with FES,
the bank delivers traveller's cheques and foreign currency to the
Pan Asia Bank branches are online and most have Saturday banking and
extended banking hours.
cheque clearing process has been centralised and any cheque
deposited, regardless of where it is drawn, will be cleared within
one day if presented in Colombo. The benefit of reducing transaction
costs is passed onto the clients.
even have a 24 hour hotline number to report all concerns and
suggestions and PABC is taking every step to enhance productivity
and service levels
speedier service, convenience, a host of functions and low costs
involved, SMS banking is set newer standards keeping with PABC's
vision to be the most customer preferred bank in Sri Lanka, the bank
has made investments on enhancing its services with innovative
bank initially joined up with Dialog GSM and introduced SMS banking
toits customers and has now entered into an agreement with Mobitel
as well for SMS banking.
bank believes that customers come first, and the profit follows and
is in the process of developing more functions and features in order
to provide an even more superior service to our customers under the
bank will also open two extension offices in Wellawatte and
Wennappuwa in the near future.
the Gedarata Mudal product catching on fast, the bank is also
planning on making arrangements with a bank in Italy in lieu of its
move to Wennapuwa. The customer service centre, which will be opened
on August 25, is located on Chilaw Road.
about the locations of the new branches, Deputy CEO, Bradley Emerson
said, "These two areas are heavily populated and signify
potential for retail operations. This will also help the deposit
base and liquidity of the bank."
order to enhance the professional skills and to complement the
initiative taken by the bank to expand, the bank has also employed
the Deputy General Manager, Claude Peiris, who will strengthen the
operations and have operational risk management in place.
bank looks forward to the future confidently despite the macro
economy challenges and has already taken steps to overcome such
hurdles and challenges with determination and prudently designed,
half year group pre-tax profit up by 40%
National Bank (HNB), Sri Lanka's largest private sector commercial
bank, continued its impressive comeback by recording a 22% rise in
pre-tax profits to Rs 676 million in the six months to June 2005.
group too has delivered exceptional results with pre tax profits
recording a 40% increase during the first six months of 2005 to Rs.
807 mn. Notable performances by HNB Securities Ltd. and HNB
Stockbrokers Ltd. contributed to the overall group net profit after
taxation of Rs. 648 mn during the period.
on the performance, HNB's Director/ Chief Executive Officer,
Rajendra Theagarajah said, "We are extremely satisfied with the
consistency in which two successive quarters have recorded such
exceptional performance. The strategic redirection of the bank in
balancing business growth with profitability, improving
productivity, managing costs, and focusing on enhanced asset quality
has been taken to heart by staff at all levels within the bank which
has seen the entire network working towards these goals."
interest generated from interest sensitive assets has increased by
31%. The first half of the year 2005 has also seen the bank's total
operating expenses entirely covered by net interest income from core
banking activities. Net income of the bank which includes foreign
exchange income, commission income and investment income in addition
to net interest income, grew by 14% during these six months.
has maintained its tight leash on costs with operating expenses
increasing by a mere 8% during the period. Improved procurement
procedures, advantage of economies of scale and pooling of common
processes are some factors that have contributed towards effective
cost management in the bank.
22% rise in profits has been achieved with an asset growth of just
4% during the first half of 2005. Effective balance sheet management
coupled with controlled growth has contributed towards improved
return and productivity of the bank's asset base. The bank's
commitments and contingencies has also shown a 26% drop.
continues its quest to improve its asset quality. The bank's loan
quality has shown steady improvement with two key performance
indicators, namely the NPA ratio and NPA cover having improved to 9%
and 62% respectively in June 2005
December 2004 tsunami devastated many parts of Sri Lanka and
unfolded human tragedy in a scale never seen before in Sri Lanka.
Although about a dozen branches of the bank mainly situated in the
affected areas performed below par, the rest of HNBs network
performed above plan and offset any adverse impact. Close and
continued attention by the decentralised regional/zonal management
will ensure affected branches will turn around before year-end.
capital infusion, sustained effort on recoveries, balanced loan
growth, aggressive cost management and improved productivity has
contributed significantly towards Fitch Rating Lanka upgrading its
rating of HNB to 'A'
in July," Theagarajah added.
voting share closed at Rs. 80 end June, reflecting a 44% growth over
December 2004 levels.