Corporate

Sampath Bank

Post tax profit Rs 1.5 b

Sampath Banks exposure to the property development sector is 0 per cent but the property development sector is shaken due to the recent fallout of Ceylinco group. When many assets of the Ceylinco Group come to the market it will have an effect on the property development market, said CEO Sampath Bank, Harris Premaratne.

He said that Sampath Bank is not exposed to the Ceylinco Group even by a single cent but depositors in the country will have a preference towards the State banks compared to the private banks.

He said that Sampath Bank has performed remarkably well in 2008, despite the unfavourable conditions that prevailed in the economy and many challenges faced by the Bank and financial service industry in general during this period. Pre Tax Profit of Sampath Bank, the main entity of the Sampath Group, crossed the Rs 2.5 Billion mark and reached Rs 2.564 Billion in 2008, as against Rs 2.218 Billion in the previous year. This amounted to a pre-tax growth of Rs 346 Million or 15.6 per cent, as against the negative growth of 2.2 per cent recorded in 2007. Post Tax Profit of the Bank for 2008 amounted to Rs 1.414 Billion, as compared to Rs 1.052 Billion for 2007, which reflected a significant growth of Rs 362 Million or 34.4 per cent, as against the moderate growth of 2.3 per cent in 2007.

Pre Tax Profit of the Sampath Group, which consists of the Bank, its 6 subsidiaries and an overseas Associate Company rose to Rs 2.787 Billion in 2008, from Rs 2.384 Billion in 2007 recording a growth of Rs 403 Million or 16.9 per cent, as against the negative growth of 0.5 per cent in 2007. Post Tax Profit of the Group crossed the Rs 1.5 Billion mark and reached Rs 1.525 Billion in 2008, as against Rs 1.201 Billion in 2007. This amounted to a Post Tax Profit growth of Rs 324 Million or 26.9 per cent for the Group as against the growth of 6 per cent in 2007.

It is to be mentioned, that the above Pre and Post Tax Profit growth rates of both the Bank and Group for 2008 were significantly above the total asset growth recorded by the Bank and the Group, which amounted to 4 per cent and 3.1 per cent respectively in 2008.

We are also hopeful that these profit growth rates would compare well with the industry growth rates in 2008. These good results were achieved despite many challenges faced by the bank and the financial service industry in 2008.

Fitch affirms Abans A(lka)

Fitch Ratings has affirmed Sri Lanka based Abans (Pvt) Ltd, (Abans) National Long term rating at ‘A(lka)’, the outlook is stable.

Chairperson Aban Pestonjee

Abans’ rating reflects its position as one of the largest retailers of consumer electronics and household products in Sri Lanka, backed by the exclusive agency franchise of LG Electronics Inc, its market leader position in several product categories, and its sizable distribution network.

Fitch notes the slowdown of revenue growth to around 5.5 per cent for H109 compared to 7 per cent growth for FY08 (Rs. 11.2 billion revenue in FY08) as driven by a slowdown in consumer demand due to lower disposable income.

Operating expenses increased by 24 per cent to Rs. 2,596 million in FY08 compared to Rs. 2,097 million in FY07, which together with increase finance costs, had a negative impact on net profitability.

Fitch expects these trends to continue, albeit with some degree of costs containment and a stabilisation of interest expenses.

The increase in gross profit margins at its retail operations - to above 30 per cent in H109 versus 27.8 per cent for FY08 - however, has been significant in enabling the company to arrest some of this deterioration. The coverage ratio (funds from operations to gross interest expense) also deteriorated to 2.3x in FY08 compared to 3.4x in FY07 and will be key to retaining the rating at current levels.

Asian Alliance Insurance embarks onto its 10th year

Outstanding performance

CEO Asian Alliance Ramal Jasinghe

Asian Alliance Insurance PLC marked another successful year recording a net profit after tax of Rs. 135 million, a 20 per cent growth over previous year; a 12 per cent growth in gross written premium against last year to Rs. 1.4 billion. Both the Life and Non Life Divisions have reported impressive growths in Gross Written Premium (GWP); the Life Insurance Business grew by 9 per cent with a GWP of Rs. 970 million, and the Non Life Insurance Business recorded a GWP of Rs. 460 million, growing by 20 per cent over last year.

The investment portfolio has increased to 1.7 billion which is a 23 per cent growth.

The Life Fund has passed the Rs. 1 billion mark reaching Rs. 1.2 billion.

The reported results have led the Company to a solvency position which is well above the required margins.

Janashakthi posts formidable profits

The year under review, 2008, was a milestone year for Janashakthi Insurance PLC (JIPLC), recording a formidable consolidated Rs. 503 million profit before taxes in its very first year of converting to a Public Liability Company.

Chairman of Janashakthi Insurance PLC W.T. Ellawala said’ “The Company passed the noteworthy Rs. 5 billion in Gross Written Premium mark this year, while also posting good results despite an economic milieu that seemed lacklustre. The challenges were many but as is characteristic of Janashakthi, the judicious and pragmatic strategies we have employed held us in good stead to ensure a consistent growth curve”.

He also said, “We foresee significant challenges in terms of sustaining business performance levels and ultimately bottom-line results.