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Sunday, 6 September 2009

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Corporate

NSB's PAT up 152% to Rs. 2,038 million

The National Savings Bank (NSB) the largest licensed specialised bank in Sri Lanka securing AAA (lk) rating, has shown a remarkable performance for the six months ended June 30 2009 despite many challenges that prevailed in the industry. The Bank's profit before VAT and income tax for the first half of year 2009 recorded Rs. 4,401 million compared to Rs. 2,421 million for the same period in 2008, an increase of Rs. 1,980 million showing a 82% growth, said a spokesman of the bank.

The post tax profit has shown an increase of Rs. 1,230 million which shows 152% increase during the first half of 2009 over the corresponding period in 2008. The group position has further strengthened the profitability as the NSB Group has shown a profit after tax of RS. 2,600 million which recorded an increase of 208% over the first six months of year 2008 due to the exceptional performance of the NSB Fund Management Company, the primary dealer arm of the Bank.

Contributions for the above growth in profit was made from interest and non interest income as well.

Net income increased by Rs. 1,283 million. Further an upward trend in the share market resulted in a reversal of provision for decline in market value which contributed Rs. 908 million to operating profit before tax.

In terms of operating expenses except for loan loss provisions has shown 12% increase over the first six months of 2008. The increase in costs was in line with the expansion of bank's operations. Despite cost increase the Bank has managed to maintain its profitability while improving the cost to income ratio of 42% (without VAT).

The above performance has been backed by the Bank's sound investment portfolio which consists of risk free government securities consisting 72% of Bank's investment portfolio. During the first six months of 2009, housing and pawning advances portfolio has increased by Rs. 1,617 million. The Bank's non performing loan ratio has been maintained at a level of 2.5%.

An increase in deposit mobilization has crystallized the public confidence in the Bank and the soundness of the Bank's operational strategies. The Bank has mobilized Rs. 19380 million for the first six months of 2009 and as at 30th June 2009 the total deposit base stood at Rs. 278 billion. This is an increase of 7.5% over the last balance sheet date.

NSB has been continuously supporting the society through various disciplines as a responsible corporate citizen. During the first half of the year the Bank contributed Rs. 2,363 million as taxes to the Government.

The Bank complies with the capital adequacy requirements (Basel II) where core capital and total capital ratios have stood at 18% and 13% respectively. The statutory liquid ratio of the Bank stood at 70% level which is above the requirement.

Eagle records 30% revenue growth in IH 2009

Eagle Insurance PLC recorded a consolidated revenue of Rs. 4,339 million for the first six months of 2009. This reflects a growth of 30% over the corresponding period in 2008. The Total Gross Written Premium income of Rs. 2,981 million is almost in line with the previous year.

The Group's net profit performance for the first half of 2009 is impressive at Rs. 247 million compared to the net profit of Rs. 42 million in the first half of 2008. This noteworthy growth of 482% is mainly attributed to the significant increase in investment income and the improved underwriting result of the General insurance business. Investment income of the Company and Group includes capital gains of Rs. 98 million and Rs. 29 million respectively, arising from the disposal of the Company's fully owned subsidiary - Eagle NDB Fund Management Company Limited.

The financial results for the quarter do not include a bottom-line contribution from the long-term insurance business as it is usual that this profit is determined at the end of the financial period after the actuarial valuation is carried out. As such, the profit from long-term insurance business will be included in the financial results for the year.

The Company has released its quarterly financial results to the Colombo Stock Exchange in terms of the new Listing Rules. The quarterly financial results are now available to the shareholders via the Company's website and any shareholder who wishes to obtain a printed copy can on request, obtain a copy from the Company.

Commenting on the Company's performance, Managing Director, Deepal Sooriyaarachchi, said Our first half performance has been impressive. The strategies in place are expected to yield positive results at year-end. We are now in the process of building organizational capacity and capability to ensure that Eagle is well positioned to explore the full potential of the emerging socio-economic outlook in the country.

Whilst commending the Company's performance Craig Brackenrig, Chairman Eagle Insurance said The strategic approaches taken have delivered satisfactory business results in the first half of 2009. Aviva is committed to support Eagle to ensure that the Company is ready to seize opportunities for growth and value creation.

William Lisle, Aviva's Director Developing Markets, Asia Pacific region, joined the Eagle Board of Directors. He is in charge of the Aviva businesses in Malaysia, Korea, Sri Lanka and UAE. His appointment reflects a greater focus and commitment by Aviva to its Sri Lankan business.

Eagle joined the global Aviva community in 28 countries in celebrating Aviva Day by taking part in various CSR and community development initiatives. Converting the Aviva Day to a week long CSR agenda, Eagle celebrated Aviva Week, by engaging the employees, the field sales force, and the community at large in a number of CSR activities. The company kicked off Aviva Week by launching Aviva Green Village in Ihala Hevessa in the Kalutara district by gifting 15 solar panels to families whose homes are not yet connected to the national electricity grid. Financial scholarships were also granted to 15 schoolchildren in the village. The Aviva Week also marked the launch of the Employee Volunteer Leave programme Eagle Lend a Hand, a unique initiative to encourage employees to engage in CSR activities identified from the company charities list.

Stock Focus

[28th Aug 3rd Sept 2009 by Elton P. Ebert]

A flood of funds flowed into the bourse pushing the indices into positive territory. The Milanka crashed through the 3,000 barrier on Wednesday but declined subsequently. The turnover for the period was very-encouraging as interest was widespread, but more emphatic in the Hotels and Banking sectors.

JK Holdings, Dialog and Environmental Resources remained in the frontline, although with a minor price variation. Shaw Wallace escalated to Rs. 150 on Friday but tapered down to Rs. 136. Notable gains were seen in Regnis, Colombo Pharmacy and in most of the Ceylinco Group stocks including Blue Diamonds voting and Non Voting.

Fair interest prevailed in Nawaloka Hospitals and Vallibel Power.

HOTELS AND TRAVELS

An extension of the sustained interest in Hotel Services prevailed this week. Noticeable improvements were witnessed in Browns Beach Hotel which ended at Rs. 74.50, Hotel Sigiriya Rs. 67.75, Kandy Hotels Rs. 119 and Serendib Hotel Rs. 68.25. Nuwara Eliya Hotels experienced a mild fluctuation and ended the period at Rs. 375.

BANKS FINANCE AND INSURANCE

An extraordinary appetite for Merchant Bank was evident on Wednesday with a peak level of Rs. 30.50 on dealings in excess of 6 million shares and for Seylan Bank Non Voting shares were another 6 million shares were transacted which was followed by a further 7 mln on Thursday. Its peak level being Rs. 14.

Alliance Finance was transacted at Rs. 225 on Wednesday while Sampath Bank closed at Rs. 146. The finance and SMLL and Seylan Merchant Non Voting also evoked market support.

Among the positive signals, the rise in US Auto Sales for the 1st time since October 2007 is encouraging, however the unemployment data brought down the U.S. Stock Markets mid week. The HSI closed at 19,761.68 and the Nikkei at 10,214.64.

HEAVY DEMAND

JK Holdings - 3,225,800

Hotel Services - 5,327,200