Corporate

People’s Bank records impressive performance

People’s Bank recorded an impressive performance, in profit and balance sheet growth over the past nine years. The Bank which completed 48 years of service in 2009, recorded an impressive performance in 2009. The Bank’ profit before taxation and appropriations reaching its highest level of Rs. 6.1 billion the 2009 financial year, while profit before tax (PBT) for the group surpassed Rs. 7.8 billion.

The Bank’s profit before taxation grew by 7.3% while profit after taxation recorded an impressive 23% growth over the previous year.

The Bank said, this achievement was made despite external as well as internal challenges which was managed ably in the year under review.

People’s Bank currently had the widest network of 670 branches and service centres, and boast of an asset base exceeding Rs. 476 billion with a deposit profolio of Rs. 396 billion. The Bank’s key deposit, the Rupee savings balances recorded a healthy Rs. 18.8 billion or 13.5% growth over Financial Year 2008, which ended at Rs. 158.2 billion. This was a noteworthy achievement considering the severe competition and the steep yield curve that prevailed up to the third quarter of 2009. The Bank has a wide range of deposits and loan scheme to suit individuals as well as large and small enterprises. Loans and advances grew by 13.5% over FY 2008 as compared to the overall contraction of 4% experienced in the industry during Financial Year 2009.

As at end 2009 net interest income of the Bank grew by Rs. 5.0 billion to Rs. 23.9 billion remarkable 26% rise compared with 2008. This was mainly due to prudent pricing and expansion in lending.

The Bank’s overheads increase was managed at 15% or Rs. 2.6 billion to Rs. 19.7 billion over 2008. Key driver behind the increase being salaries and related expenses due to the pay adjustment made through the 2009 - 2011 collective agreement. Inspite of this hike PB’s cost/income ratio dropped to 60% compared to over 70 % few years ago.

The Bank’s profit before provisions and taxation reached Rs. 10.9 billion an improvement of Rs. 3.6 billion over the 2008 recorded number, and its highest on record. The Bank also recorded its highest ever profit before taxation of Rs. 6.1 billion in 2009.

The restructuring strategies of the bank have been change agents in the culture and attitude towards granting of credit, customer service standards and credit recovery. 2009 saw non performing loans (NPL) in the banking industry increasing materially from 6.2% to around 9%.

People’s Bank however recorded a 10 basic point reduction in the NPL’s ratio to 6.7% as compared to 6.8% in the previous year. It should be further noted that this ratio is inclusive of old bad loans which the Bank has fully provided.

People;s Bank’s NPL coverage ratio is 70.6% and well above the banking industry standard which is under 50%.

The Bank’s capital funds now amount to Rs. 17.8 billion up from Rs. 15.9 billion over the previous year.

This was brought about by substantial ploughed back earnings, despite high taxation and returns to GoSL.

General Manager, People’s Bank, P. V. Pathirana said the bank plans to launch livelihood development programs under the Pibidena Uthura Loan Scheme Program which was launched last year.

“Under this program construction of houses for low income families, fishing gear, paddy mils, paddy store houses, purchase of capital assets and income generating activities will be launched,” he said.

Pathirana said the Bank issued loans up to Rs. 231.7 million to 1,495 customers under the Negenahira Navodaya program.

Raigam Salt IPO oversubscribed

The Raigam Salt Initial Public Offer (IPO), is oversubscribed approximately by twenty (20) times with record mark for the highest oversubscription rate during the last decade.

The IPO was subscribed by many classes of investors and each of the six (06) large applications received had advanced for LKR 200 million, indicating the investor urge for an equity issue of this sort. Our experiences in the recent past on similar share issues and a debt issue was a plus factor in handling and processing approximately 12,000 applications within the short time span, since the opening and closure of the issue on 23rd March 2010.

In looking back at the salient features of the LKR 200 million equity issue, 80 million ordinary shares with voting rights were issued at a price of LKR 2.50 with a minimum subscription of 1000 shares and multiples of 1000 shares.

The IPO was oversubscribed by twenty (20) times owing to certain selective positive dynamics of the issue.

The most important factor is we worked with the company and the senior management over a long period of time to properly structure the organisation towards a successful Initial Public Offer. MBSL groomed Raigam Salt for the IPO until it was the right moment to go public and to be listed on the Stock Exchange.

Second factor in the success story is that, we were able to harness with all market segments of investors using our strong network chain of high net-worth contacts, brokering houses, banks and links to the precise segment of investors. However, the support rendered by the bankers to the issue and the placement agent are also contributing factors for the success.

Thirdly, the Company had strong prospects from the future earnings potential from its Salterns as the lifecycle of Salterns generate better cash from the harvests.

The plans on new Salterns and development of Hambantota Salterns are considered to earn greater cash in the future from the current investments infused.

Further, company’s operational costs are to remain low as the nature based ingredients to be converted as turnover during the harvesting seasons.

As such, the low priced share with greater future earnings potential attracted many investors with large investments for the IPO.

Browns Group posts Rs. 2 billion turnover

The Browns Group posted a turnover of Rs 2.6 Billion for the nine month period ending 31st December 2009.

Group turnover recorded a 41% growth over the same period last year. The Group profit stood little over Rs. 808 million for the above period.

A statement issued by the company said ‘the Company’s future direction is being chartered both as a trading and manufacturing entity while also being a strategic investment vehicle with the intent of increasing share value to its stakeholders.

The company has made several investments into both the financial and plantation sectors which they see as future revenue sources aligned to the Sunshine industries.

Brown and Company now holds over 9% stake in both Seylan Bank PLC and Hatton National Bank PLC.

The company has invested in Mathurata and Pussellawa Plantations through a strategic investment with Taprobane Holdings Ltd. Together Pussellawa and Mathurata Plantations consist of 31 tea estates and nine rubber estates. Further mini hydro projects, generating three Mega-Watts have been commissioned and several other projects are in the pipeline.

Browns and Company together with Lanka Orix Leasing Company Ltd. invested in Galoya Plantations, whose primary business is the production of sugar which has very high market potential since over 90% of the local requirement is currently imported.

The company intends to venture into ethanol production and power generation through this project.

The Browns Group has also reached market leadership in seven segments that it operates in.

The group holds 54% Market share in motor vehicle batteries, 38% and 65% market share in 2 wheel and 4 wheel tractors, 53% in marine engines, 30% in the office automation segment, 43% in radiators and 42% in the power tool category.

The Browns Group states that it is confident that with the dawn of peace and the anticipated growth of both the agriculture and fisheries sectors the company will be in a position to take advantage of the above with its range or products and services.

RAM Ratings Lanka appoints an independent director

RAM Ratings (Lanka) Limited has appointed Priyanthi Liyanage as a new independent local director on its board, effective, 1 April 2010. Mrs. Liyanage has 37 years of experience in banking and the government sector, including 31 years with the Central Bank of Sri Lanka.

While at the Central Bank, she had been tasked with managing the country’s foreign-exchange reserves, among many other duties. Mrs Liyanage had taken a keen interest in developing Sri Lanka’s reserve-management activities, with initiatives that had helped develop the same according to international standards.