SMB doubles pre and post tax profits in 1Q, 2006

The Seylan Merchant Bank (SMB) Group has reported strong growth in the first quarter of 2006 with healthy profit growth and an excellent price earnings ratio that provides a strong signal to the investor community.

In results released to the Colombo Stock Exchange, the Group reported a 125 per cent increase in operating profit before associate company profit and taxation to Rs. 29 million in the first quarter, from Rs. 12.9 million in the corresponding period last year. Profit after tax grew a healthy 104 per cent to Rs. 25.7 million.

Net Income of the Group increased from Rs. 179.2 million to Rs. 210.6 million, a growth of Rs. 31.4 million or 17.5 per cent.

This was primarily due to a 13.7 per cent increase in interest income to Rs. 172.9 million. Other income of the Group rose 38.8 per cent to 37.7 million from Rs. 27.2 million earned in the first quarter of last year.

The Group reported that SMB shares were trading at a price earnings ratio of 3.2, a heavily discounted price considering that the market price earnings ratio is 13.4 and the financial sector price earnings ratio is 9.4. This demonstrates the share's potential for investors.

The Deputy Chairman of the SMB Group Rohan Senanayake said: "The sharp bottom line improvement can be attributed to the growth in the company's leasing portfolio. It is also noteworthy that these profits were achieved despite significant increases in taxation."